Islamic finance slows, Sukuk grinds to halt

The Daily Star:

Islamic finance is slowing as the global financial crisis hits its hubs in Malaysia and the Gulf, but the sector now has a chance to move on to Western economies seeking to boost their financial centers.
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"There is a need for petrodollars in the West so more countries will be pandering to the rhetoric of Islamic finance to try to recycle petrodollars to their own financial capitals, be that London, Singapore or Kuala Lumpur," said Mahmoud al-Gamal, chair of Islamic Economics at Rice University.
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The easing market has provided scholars, lawmakers and bankers a window to reassess structures including the sukuk, or Islamic bonds, which are still under the spotlight as different bodies debate on how compliant instruments are with Islamic law.

Sukuk, once the industry's hottest product, have dried up, with the Gulf Arab region seeing no issues in the first quarter of 2009.
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"Islamic finance instruments were structured the same way as conventional finance instruments so I think it was propaganda to say they were insulated," said Gamal. "In 2009, Islamic finance could grow faster because many multinational banks had to cut back quite a bit on lending..."