The United Kingdom has established a task force on Islamic finance in an effort to "cement London's status as the western hub" for the industry, as competition grows among financial centres to attract Sharia-compliant business.
The move is intended to showcase "the UK as the preferred choice for the Muslim world to invest in and do business with", the British government said in a statement.
The measure comes within two months of an announcement by Dubai's Government that the emirate would seek to refashion itself as a global "capital" of the Islamic economy, with a focus on halal food, pharmaceuticals and cosmetics, alongside charitable giving and dispute resolution.
But it is Islamic finance where Dubai has sought to wrestle with London for sukuk listings, as it aims to become the world's biggest listing venue for Islamic bonds.
Malaysia has traditionally been the biggest centre for sukuk sales, although western finance centres outside of the Islamic world are increasingly throwing their hats into the ring.
Bermuda, the British Virgin Islands and Ireland are all seeking to develop their Sharia-compliant financing industries.
The British initiative does not appear to compete directly with Dubai's move. Instead, it is hoped that the task force will help to support London's hosting of the World Islamic Economic Forum in October, while also attracting inward investment, including through sovereign wealth fund investment in UK infrastructure.
Britain has targeted the UAE in the past to invest in its infrastructure: the Abu Dhabi Investment Authority is a major stakeholder in Thames Water, the UK utility company, and DP World is one of the biggest investors in the London Gateway port facility.
The task force will be co-chaired by Britain's financial secretary to the treasury Greg Clark and Baroness Warsi, the senior minister of state at the foreign and commonwealth office.
"We expect the global market for Islamic financial services to experience significant growth over the coming years, but feedback from decision-makers in the Middle East and South East Asia suggests there is a lack of awareness of the UK industry and that we should be doing more to promote the sector," said Baroness Warsi.
The support from the British government would help to boost UK participation in the burgeoning Sharia finance industry, which lost speed after a sale of Islamic bonds was shelved in 2009, said Neil Miller, the global head of Islamic finance at KPMG.
"Those in the UK who have been dealing with the government over the last six to seven years have been hoping that initiatives would progress, particularly after the sukuk didn't go ahead," he said.
Standard & Poor's, the ratings agency, estimates that the Islamic finance industry will more than double between now and 2015 to about US$2.6 trillion (Dh9.55tn), equivalent in scale to the money market fund industry.
"Global issuance expanded for the fourth year in a row in 2012, growing 64 per cent to about $138bn, and we expect another strong few years. Despite the growth spurt, the sukuk market is still a small segment of the global fixed-income world," S&P said in a report this week.
Emirates Airline and Dubai Islamic Bank launched new sukuk sales yesterday, Reuters reported. DIB yesterday launched a Tier 1 perpetual sukuk sale, one of the Arabian Gulf's riskiest debt deals yet, while the airline began a $1bn Islamic bond sale.