IB Asia Shariah Board members Shaikh Nizam Yaqouby and Dr. Mohammed Daud Bakar say that while changes in the global investment climate are driving demand for Islamic banking, it is the development of innovative Shariah-compliant products that will help grow the industry.

“Islamic Shariah scholars have led the way in innovation. Investors now demand more than just debt finance (lending and borrowing) in their products. They participate in the assets and this creates real economic value,” says Shaikh Yaqouby, an internationally-acclaimed Islamic scholar and teacher of Tafsir (a scientific study that focuses on the interpretation and explanation of the Holy Quran) based in Bahrain.

He adds: “More investors whether affected directly or indirectly by the sub-prime situation are attracted to investment vehicles which are underpinned by an inherent immunity from risk. As Shariah-compliant banking forbids the purchase of debts, it is therefore one of the options that investors are turning to.”

Dr. Mohammed Daud Bakar, another IB Asia Shariah board member and the Chairman of the Shariah Advisory Council at the Central Bank of Malaysia, says: “The demand for Islamic investment vehicles in certain categories currently exceeds supply. As an example, the global Sukuk market is increasing at an astonishing average of 40 per cent per annum, fuelled by record investor numbers turning to Islamic banking. The Sukuk allows investors to participate actively and bear the risks — which can be minimised but never eliminated; being inherent in all investments — alongside the rewards.”