Dubai: Free zones around the world are expected to contribute significantly to the growth of Islamic economy, with their contributions estimated at $55 billion (Dh202 billion) in 2015 and projected to reach $117 billion by 2021, according to the findings of the Free Zones Outlook Report.
The report by Dubai Silicon Oasis Authority (DSOA) and Thomson Reuters identified Dubai as the world’s leading Islamic economy-enabling free zone city, followed by Kuala Lumpur and Johor Bahru in Malaysia, and Manama in Bahrain.
Free zone contribution to the halal food sector amounted to $34 billion and is expected to hit $74 billion by 2021, while the $7 billion contribution to the modest fashion sector is projected to double by the same period.
In the Islamic economy arena, free zones are a relatively new phenomenon and largely focus on halal food. According to the report, Malaysia was one of the first nations to develop the concept, creating dedicated free zone “hubs” across the country. At present, 30 free zones across 18 cities worldwide support Islamic economy activities.
“The Free Zone Report is a ready reference on niche economies that drive the growth of Islamic economy sectors. It outlines the contribution of free zones to the various sectors of the Islamic economy based on their attractiveness to companies and entrepreneurs working in this domain,” said Dr Mohammad Al Zarouni, vice-chairman and CEO, of DSOA.
The Free Zones Outlook Report 2017 highlights the issues facing each of the Islamic economy sectors that free zones can address.
“Free zones represent ideal platforms to grow the key sectors of Islamic economy. Even though the facilities free zones provide may differ around the globe, their value proposition is essentially the same — they enable local and foreign investors alike to operate, network and expand. However, the benefits are mutual — today and in the near future, Islamic economy can offer real added value to free zones,” said Abdulla Mohammad Al Awar, Chief Executive Officer of the Dubai Islamic Economy Development Centre (DIEDC).
Experts believe maximising free zone use across all sectors of the Islamic economy has the potential to spearhead significant growth of the small-and-medium-sized (SME) segment in the UAE. These sectors can go a long way towards achieving the goals of UAE Vision 2021, including raising SME contribution to non-oil gross domestic product (GDP) to 70 per cent and increasing non-oil sector contribution to the total GDP to 80 per cent.
“Free zones allow constituents to maintain superior quality of products and services and adhere to best practices. There are ample opportunities for free zones to create significant economic value across all pillars of the Islamic economy. Our report projects that the value of Islamic free zone exports will more than double over the next five years,” said Nadim Najjar, Managing Director of Thomson Reuters in the Middle East and North Africa.