Sukuk have come a long way

Islamic finance has come a long way since 2002, when Malaysia raised the first dollar-denominated Islamic bond or sukuk.

Non-Muslim nations are rushing to burnish their credentials as financial centres by issuing maiden sharia-compliant products.

This year, Hong Kong, South Africa and the UK have been added to that list. Next in line is Luxembourg, which just like others is seeking to tap increased demand for these non-conventional financial assets and further support its domestic policy goals for Islamic finance.

As investors become more familiar with these products pricing will improve, suggesting Islamic finance will be more competitive with more traditional forms of...