Khaleej Times: Abdul Basit & Haseeb Haider
DUBAI — Dubai has taken a giant leap towards diversification by putting into motion an ambitious plan to turn the emirate into the Islamic economy capital of the world. The plan is envisioned to grab a significant share of the Islamic finance market worth trillions of dollars.
His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Wednesday announced a group of initiatives to set up a comprehensive platform of Islamic economy products and services aimed at integrating Islamic economy as part of the emirate’s overall economy.
Top government officials, senior bankers and Shariah specialists welcomed the initiatives and said it would further strengthen Dubai’s position as one of the top international financial hubs.
Shaikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, said: “I am optimistic about achieving the goal of Dubai becoming the world capital of Islamic economy. Dubai has sufficient experience, state-of-the-art infrastructure and possesses strategic geographical location in the heart of the Islamic world. It also has the will and determination, but has the most important of all: Mohammed bin Rashid Al Maktoum, who leads Dubai with all wisdom, confidence and resolve for the future.”
Shaikh Mohammed later issued a decree assigning Shaikh Hamdan to oversee the development of the Islamic economy sector. Shaikh Mohammed said that with Islamic economic principles playing a growing significance in today’s global business environment, with its size reaching $2.3 trillion and a growing community of 1.6 billion Muslims, the new initiatives are expected to further promote investments in Dubai, especially from economies spanning the Middle East, Africa, South Asia and South-east Asia.
The planned platform includes Islamic finance instruments, Islamic insurance, Islamic contracts’ arbitration, Islamic food industry and trade standards (Halal food), and Islamic quality management standards.
Among other initiatives announced by Shaikh Mohammed include the development of commercial standards for Islamic industries and guidelines for Halal food manufacturing. Dubai also seeks to develop Islamic quality standards for Halal food approval. This will encourage the food industry and promote linkages with global and regional businesses, as well as different business sectors, including transport, storage and handling.
“The new initiatives from His Highness will certainly lend tremendous support and confidence to the industry and encourage the stakeholders to comfortably rely on using Islamic banking, finance and insurance solutions to satiate their financing requirements to ensure the continuity in their growth and development,” Dr Hussain Hamed Hassan, chairman of the Shariah Board of Dubai Islamic Bank and managing director of Dar Al Shariah Legal and Financial Consultancy, told Khaleej Times.
Giyas Gokkent, group chief economist at National Bank of Abu Dhabi, said Dubai has in place basic ingredients to become the capital of Islamic finance. “Advisory, regulatory, legal structure and workforce are two pertinent ingredients, but there is a range of other factors which are also relevant to becoming a general financial centre — many of which Dubai already has,” Gokkent said. He said the Shariah–compliant banks roughly have a 15 per cent share in banking activity in the country as a whole.
Shaikh Mohammed said the new framework for promoting Islamic economy will further strengthen the open and integrated approach of Dubai in doing business. It is expected to lend further momentum to Dubai’s well-diversified economy, which is on an ambitious growth path fuelled by the robust performance of its core sectors including trade, retail, tourism, aviation, hospitality, financial services and logistics in 2012.
“Our cosmopolitan outlook to doing business continues to be our economy’s driving force. Adopting a modern and scientific framework for Islamic economies worldwide, here in Dubai, meets the demand from local, regional and international investors for a central hub to invest, grow and do business,” he added.
He said the government will not compromise on its principles of openness and commitment to a free market economy. “By strengthening Islamic economic principles as an integral part of our overall approach to growth and development, we are further supporting the entrepreneurial community, especially from the Arab world,” he added.
Shaikha Lubna Al Qasimi, Minister of Foreign Trade, praised the announcement and said the move would build on Dubai’s success based on a well-planned vision to push economic diversification drive forward and create new sectors that support the pace of developmental, economic and social progress.
Dubai Islamic Bank deputy chief executive officer Dr Adnan Chilwan said: “With an unrivalled level of expertise and experience, the UAE is uniquely positioned to service the ever-increasing worldwide demand for innovative, high-quality, Shariah-compliant products and services. Dubai Islamic Bank, which has been the pioneer of Islamic banking across the world, congratulates His Highness on this visionary initiative, and assures its commitment to help make Dubai into the global capital of Islamic economy.”
Afaq Khan, chief executive officer, Standard Chartered Saadiq, said: “The creation of the Islamic finance council will further strengthen Dubai’s position as an international financial hub. Islamic finance has grown significantly over the past few years and has played a key role in the development of the financial industry as a whole. As a leading international bank, Standard Chartered remains committed to Dubai and the UAE as we continue to provide world class Islamic Financial Services and expand our capabilities to leverage the growing needs of clients in the country and across the region.
Mohammed Wassim Khayata, group chief operating officer of Finance House, told Khaleej Times: “The addition of this sector, which is just a milestone in Dubai’s economy, emphasies the importance and durability of the economic infrastructure of the emirate.”
Dr Qaiser Anis, managing director of consultancy firm Alliott Management Consulting, added: “The move will be a success like the free zones.” Due to its ideal geographical location and pro-business environment, he said the Halal food industry can help boost Dubai’s GDP substantially.”