Dubai: The concept of developing an Islamic economy is closely linked to development of Islamic banking and Islamic finance and related financial infrastructure. said Dr. Adnan Chilwan, Dubai Islamic Bank’s Chief Executive Officer, of Dubai Islamic Bank in an interview to Gulf News
Dubai’s objective to become the global hub of Islamic economy is supported by more than 40 years of history in Islamic banking and financial services. Chilwan said Dubai government’s initiative to transform the city into a hub of Islamic economy gives a platform to Islamic finance and Islamic banks to showcase what it is capable of.
“Dubai has a pioneering advantage to its credit for being a logistical hub, in being a geographic hub, a tourism hub — all these advantages were always there. A logical extension of that was to become the capital of the Islamic economy,” he said.
Islamic finance in its current form is largely home-grown for Dubai. It was here that four decades ago the idea of Islamic banking was incubated with the establishment of Dubai Islamic Bank. So it gives Dubai a natural advantage for the emirate to take this mantle forward and become the hub of Islamic economy.
Being the capital of Islamic economy does not mean just being the capital of Islamic finance. It involves the development of a whole range of businesses that follow the principles of sharia such as halal food, travel and tourism and fashion industry to name a few.
“There is about $6.7 trillion [Dh24.6 trillion] of assets within the Muslim global expenditure. Islamic finance is well placed to support all other industries that are supported by this asset base. When industries are nascent, they need proper funding, infrastructure and regulation. All the industries and elements of Islamic economy complement one another. Keeping all that in mind, I think Dubai is naturally progressing to become the capital of the Islamic economy,” said Chilwan.
Government support
Government support to the Islamic banking and financials services sector is important as it is still in the early stage of development. In 1980s in Malaysia when Islamic banking started it was predominantly supported by the government, as a result today Malaysia has emerged as one of the most developed markets for Islamic financial services. Within the GCC, in Qatar the government has extended strong to the extent that it banned conventional banking from offering Islamic banking. In Saudi Arabia, all banks are Islamic and therefore the official support is universal and equal for all banks. “In the UAE, the Islamic economy initiative is going to work as a big boost for the Islamic banking and financial services industry. The country has set up the UAE Islamic Economic Development Centre, Which is a body that has 7 pillars and 47 initiatives in order to make sure that not just Islamic finance, but Islamic economy actually grows,” said Chilwan.
It is Dubai’s ambition to become the capital of global Islamic economy. If you look at these initiatives we can see that there is overriding government support for both Islamic banking and Islamic finance is progressing in the right direction in the UAE.
