Jersey poised to profit from forecast Islamic finance boom
Monday 29th October 2012, 3:00PM GMT.
JERSEY is well placed to benefit from a forecast massive rise in Islamic finance by having made such a strong move into the Gulf region, according to global advisory firm Ernst & Young.
The global demand for sukuk, securities structured to comply with Islamic law, is expected to grow three-fold from US$300 billion to US$900 billion by 2017, according to estimates by the big four accountancy firm.
And a senior manager at the firm’s global Islamic banking centre, Bilal Ahmed, said that as most of the demand for sukuk comes from South East Asia and the Middle East, Jersey can capitalise on its strong links with Arab states in order to increase its involvement in the area.
Jersey Finance has opened an office in Abu Dhabi and is looking at how it can penetrate further into the Gulf region with plans to target Saudi Arabia.
Mr Ahmed said: ‘The growth in anticipated demand provides Jersey with further opportunities to acquire a larger share of the sukuk market and increase its footprint in the Islamic finance industry.’
He said that Jersey had already been playing an important role by providing a reputable jurisdiction for special purpose vehicles used for sukuk issuances.
‘There is no doubt that sukuk offers the Island an opportunity to engage in a rapidly growing sector. It is also attractive precisely because it offers greater stability than traditionally western forms of debt have been able to offer in recent years,’ he said.
Mr Ahmed said that the exponential rise in demand was primarily a result of the double-digit growth of the Islamic banking industry and the increasing appetite for credible, Shari’a compliant, liquid securities.
He said the demand principally comes from Islamic financial institutions, fund managers and high net worth individuals.
‘The Eurozone debt crisis has also prompted renewed interest from conventional institutions because these products are backed by real assets,’ he said.
He said that currently the main constraint on the sukuk market was a lack of supply of sukuk securities. Ernst & Young say that has not been helped by the lack of a global standardised platform to facilitate trading.