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UK Treasury in Key Leadership Role in Regulators and CEOs Global Islamic Finance and Investment Group

Another sign that the British Government has stepped up its Islamic finance proposition to a potentially important new level is the establishment by the UK Government of the Global Islamic Finance and Investment Group (GIFIG), comprising financial regulators and chief executives from the OIC countries.

UK Financial Secretary to the Treasury, Sajid Javid, who was promoted to this new position in Prime Minister David Cameron’s mini cabinet reshuffle in October, said on the sidelines of the World Islamic Economic Forum in London that GIFIG will meet regularly to identify and address the critical factors that will drive the global Islamic finance market over the next five years.

The Group is chaired by UK Foreign and Commonwealth Office Minister, Baroness Saeeda Warsi, who is also the Co-Chair with Sajid Javid of the UK Government Islamic Finance Task Force launched in March earlier this year. Lord Green, Minister of Trade and Alan Duncan, Minister for International Trade, are also key members of the ministerial team in the Task Force.

“I am delighted that the government is establishing this Group. We are competing in a global race and it is crucial that we, as a country that is open for business, know what we need to do to take advantage of the Islamic finance opportunities that are out there. The Islamic Finance and Investment Group will be perfectly placed to pick up on developing trends and will have the expertise to help Islamic finance grow globally, as well as developing London as one of the world’s leading Islamic finance centres,” explained Sajid Javid.

According to the UK Treasury, GIFIG will comprise members from key Islamic finance centres in the Gulf Cooperation Council (GCC) countries and South East Asia, including Central Bank Governors from Kuwait, Bahrain, Qatar, UAE, the UK and Malaysia; key industry chief executive officers; and senior experts and practitioners from the Islamic finance industry.

GIFIG, according to a statement of HM Treasury, will hold its inaugural meeting in January 2014 under the auspices of the UK Government to consider the issues surrounding Islamic finance and how best to work together to promote its development. Drawing on London’s experience as a leading global financial centre, the group will play an important role in helping to grow the Islamic finance market going forward.

The UK Treasury will consult other important markets and players including Saudi Arabia, the single largest market for Islamic finance in terms of assets and liquidity, and Indonesia, the most populous Muslim country in the world. Saudi Arabia and Indonesia, together with Turkey, are also the sole OIC members of the G20.

Financial Secretary Sajid Javid will confirm the final scope and membership of GIFIG at the Dubai Global Islamic Economy and Finance Summit which is being hosted by the Government of Dubai later this month.  Mr Javid, in a tweet stressed that “our (the Government’s) sovereign Islamic bond plan will help the UK become a world leader in Islamic finance, boosting UK investment and jobs”.

Industry organisations such as TheCityUK, the influential body promoting London as the leading international financial centre, including Islamic finance, are strongly supporting the Coalition Government’s new-found initiatives on Islamic finance. Chris Cummings, CEO of TheCityUK, said in a statement that “the sum proposed for the Sukuk, 200 million British pounds, is a good start to measure demand and once this is identified, larger issues can be contemplated. Apart from the message that the announcement sends to our international partners confirming London’s position as a global hub for Islamic Finance, the issuance of an Islamic bond in the UK will also address the liquidity requirements of Islamic banks currently based in the UK and those looking to establish operations here.“

Perhaps the biggest fillip from GIFIG could come in facilitating policy movement on Islamic finance in Organisation of Islamic Conference (OIC) member countries, many of whom lack such policies primarily because of a lack of technical capacity and capability. GIFIG will also cooperate with the Islamic Development Bank (IDB) in this respect. The IDB already has a technical cooperation arrangement with the International Monetary Fund (IMF) to help countries interested in facilitating Islamic finance in their markets develop regulatory, legal and other frameworks.

With the UK Treasury, a leading member of the G7 (Group of Seven industrialised countries) leading this initiative, the chances of such policy traction will be increased. Given the lifespan of GIFIG is 5 years, the Islamic finance industry can look forward with some optimism to proactive changes in the policy framework of new OIC markets and beyond to leverage a US$1.3 trillion global Islamic finance industry which is projected to grow to US$3 trillion by the end of the decade.

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