MANAMA: A key issue for the sukuk Islamic bank market in the region is the time that it takes to bring an issue to the market.
That is the view of Thomson Reuters global head of Islamic finance Rushdi Siddiqui.
"Malaysia has developed its sukuk market in a manner that an issue can be issued swiftly and that is something this region needs to be able to replicate," he said on the sidelines of the WIBC conference yesterday. "A key issue here is to come to the market faster."
He said that the sukuk market was currently where the eurobank market was in the 1960s and 1970s and it has to move forward and raise efficiency so that non-Islamic financial institutions will come to this market to raise money.
"The key issue is to make the market more efficient," he said. "At present the market is worth around $600 billion and is dominated by Malaysia.
"But in growing the market Malaysia has capacity constraints and there is a difference between growth and profitable growth in the market," he added.
He said that the market had traditionally been dominated by the real estate sector but it should look to other areas.
"The halal food industry is a $640bn market and this is an area currently funded through conventional finance that the industry should be looking at.
"That is a level of debt funding that could be replaced by sukuk because it is a truly asset-backed debt prospect."
Meanwhile. demand for sukuk is expected to almost double over the next four years, driven by strong growth in the Middle East and Asia and their spread to new markets, a Thomson Reuters report said. On average, investors expect to allocate $200 million into Islamic investments, or 50 per cent of their portfolios, next year, with sukuk representing 35pc to 40pc of this.