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One is whether it is intended to facilitate access to financial services by a local Muslim
population or whether it is intended to support a position in international financial markets.
The former approach would be likely to focus primarily on banking and to some extent
Takaful; the latter on capital markets, wealth management and perhaps Retakaful. It is of
course possible to take both approaches simultaneously (as two of the five centres considered
here have done). However, the very small Muslim populations of Luxembourg and Hong Kong
make the former approach effectively non-viable in those territories.
The second is the degree of active strategic involvement by Government or quasi-
governmental bodies. At one end of the spectrum, official bodies may adopt a strategy which
might, for example, involve changing tax or regulatory provisions, training initiatives, active
promotion of the jurisdiction, issue of sukuk to provide investment opportunities for Islamic
firms, etc. At the other, official bodies may adopt a purely passive approach, leaving
commercial firms to enter the market as and when they see opportunities (and with a more or
less facilitative attitude by regulators to any proposals that come forward).
This chapter argues that the UK and Singapore have both had Government-driven strategies
aimed at both the domestic and international markets; Luxembourg and Hong Kong have had
Government-driven strategies aimed at particular segments of the international markets; and
Germany has taken a mainly passive approach, though German firms have been highly active in
some sectors.
Because of the differences between these centres in context, strategy and achievement, the
remainder of this chapter offers a brief narrative summary of the approach and achievements
of each centre, before summarising it under the headings used in other chapters. It then draws
some comparisons between them.
5.2.1. Strategic Approach and Achievements: UK47
The UK had an early involvement with Islamic finance and has energetically promoted London
as a centre for it, with support at all levels from the Prime Minister down48. While the strategy
has focused largely on London’s position as an international financial centre, it has included a
strong component of financial inclusion aimed at making Islamic financial products available to
the UK Muslim population. The Government itself has been involved in this, with proposals to
introduce a Shari’ah-compliant equivalent to student loans (DBIS 2014) and published
guidance on the public registration requirements when Islamic finance is used to purchase
land49.
Islamic finance reached the UK in the 1980s with the first commodity Murabaha transactions
through the London Metal Exchange, a business in which the Exchange has retained a strong
position. The first UK Islamic bank, Al Barakara International, was launched in 1982. During
the 1980s a number of investment banks offered bespoke Shari’ah compliant products to their
Middle Eastern clients, mostly in the areas of trade finance, leasing and project finance (UKTI
2014).
47 The analyses for the European centres draw on di Mauro et. al (2013).
48 See for example the Government promotional material at
UKTI (2014) and material from the City of London promotional body at:
nd UKTI (2015). Numerical data
in this section comes largely from those publications.
49 See