Islamic finance looks to shake off sukuk pricing hitch

Islamic finance has been one of the fastest-growing sectors in global finance but the industry has yet to shake off perceptions about high costs and complexity that are holding back some issuers. Britain, Luxembourg, Hong Kong and South Africa all are keen to make maiden sukuk issues, to diversify their funding sources and tap liquidity sources. However, these and other plans have been delayed by factors including double-taxation on some sukuk structures and a difficulty in identifying assets to underpin the transactions. Increased clarity on sukuk structures has helped: the design and approval process has become generic. Moreover, some jurisdictions have enacted legislation in the past few years to remove double or even triple tax duties on sukuk.