The UAE ranks top globally across five Islamic economy sectors, according to a report that forecasts Islamic finance assets would surge to $3.8 trillion while global Muslim spend on food and beverage would reach $1.9 trillion by 2023.
In five out of the six Islamic economy sectors, the UAE ranks number one globally while Malaysia once again tops the Global Islamic Economy Indicator in the State of the Global Islamic Economy Report 2018-19.
The five sectors dominated by the UAE include halal food, halal travel, modest fashion, halal media and recreation, and halal pharmaceuticals and cosmetics. Last year, the UAE came top in three sectors only, according to the report titled ‘An Inclusive Ethical Economy’ published by Dubai Islamic Economy Development Centre (DIEDC).
Sultan bin Saeed Al Mansouri, Minister of Economy and Chairman of DIEDC, pointed out that the UAE has boosted its Global Islamic Economy Indicator score this year and attained the top spots in two additional sectors.
“The rise in the country’s standing testifies to the commitment of DIEDC’s partners to implementing the centre’s initiatives, their significant contributions to the development of the Islamic economy in Dubai, as well as the success of the UAE’s sustainable development drive as part of its post-oil economy vision,” said Al Mansouri.
Abdulla Mohammed Al Awar, chief executive officer of DIEDC, said annual report offers fresh facts and statistics that provide new insights and perspectives to better understand and more accurately anticipate consumer behaviour among Muslims across key markets.
“This year, we have witnessed a surge in demand for products that not only conform to Shariah-compliant financing and stringent environmental sustainability, health and safety standards but are also manufactured using halal-certified ingredients. The consistency that is integral to the supply chain explains the rising attractiveness and uptake of Islamic economy products among the global population,” said Al Awar.
He reiterated DIEDC’s resolve in boosting the UAE’s Global Islamic Economy Indicator score through joint efforts with strategic partners to enhance the Islamic finance and banking sector – the only sector where the country placed second.
The findings of the report, produced by Thomson Reuters in collaboration with DinarStandard and the Dubai International Financial Centre (DIFC), were unveiled at a seminar held at the DIFC Conference Centre on the second day of the Islamic Economy Week.
The report estimates that Muslims spent $2.1 trillion across the food, beverage and lifestyle sectors in 2017, and forecasts spending to reach $3 trillion by 2023. By category, food and beverage leads Muslim spend at $1.3 trillion, followed by fashion at $270 billion, media and recreation at $209 billion, travel at $177 billion, pharmaceuticals at $87 billion and cosmetics at $61 billion.
According to the report, the Islamic economy has proven its ability to keep pace with the latest developments in technology and investment. Companies are adopting blockchain for payments to ensure halal compliance, and track food, cosmetics and pharmaceutical products from the manufacturing facility to the retailer. Meanwhile, artificial intelligence (AI), virtual reality (VR) and the internet of things (IoT) are today attracting more investments than ever before.
Khamis Bu Haroon, acting CEO and vice-chairman of ADIB, said trade and logistics, finance and tourism are the key pillars of the Islamic economy and the UAE has invested heavily in positioning itself as world class hub for these sectors.
“The UAE’s initiatives to create an open economy and an environment for businesses to flourish make it a natural centre for Islamic manufacturing, services, trade and investment,” he said.
Anita Yadav, senior director – head of FI research at Emirates NBD, said Dubai government is aiming to becoming the Islamic finance capital of the world.
“The government is undertaking several measures to encourage adoption of Shariah-compliant standards in banking, in food processing, in tourism etc. It is also spending money on setting up fintech companies in the Islamic finance space as well as launching clear rules for listing of Islamic products on the local stock exchanges,” she said.
Atik Munshi, senior partner at Crowe, said the UAE and Dubai are one of the key players in the Islamic economy.
“Generally, the Islamic economy is better known for ‘Islamic finance’ and ‘halal food’ products; though in fact the Islamic economy is much wider and encompasses products and services like Islamic fashion, Islamic cosmetics, Islamic travel, Islamic pharmaceutical and many others.
“The size of such economy is substantial – it is more than $2 trillion and expected to reach $3 trillion in a few years. This sector is fast growing because of the increase in population as well as increasing demand, awareness and availability of such Islamic products worldwide. Islamic finance products are considered more stable and hence even non-Muslims invest in the same,” Munshi said.
There is significant scope for growth in the Islamic economy, with only $745 million in disclosed private equity investments in the last three years, far below the approximately $595 billion in global private equity and venture capital investments undertaken in 2017.