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Welcoming the golden age of the Islamic economy

It is time to realise the potential to reap the massive growth opportunities

Gulf News

As China embarks on its “one belt, one road” initiative, with President Xi concluding his visits to Egypt, Saudi, Pakistan and Indonesia recently, a Chinese superpower is highlighting the rise and importance of Islamic countries across the world.

Muslims are the fastest growing demography in the whole world. It is estimated that by 2050, there will be 2.9 billion Muslims in the world, up from today’s 1.6 billion. Across Asia, Africa and the Middle East, where 36 per cent of the population are Muslims, more than 50 per cent of the average population age is below the age of 25. With the demography and demand, this has led some to proclaim that the golden age of this century will firmly be entrenched across the Muslim world. By extension, the world will need more Halal food, more infrastructure for Muslim dominated cities, more planes travelling to Makkah for Haj and Umrah and more funds houses and financial institutions capable of handling Sharia compliant funds.

Today, some countries have realised this opportunity and are preparing for the golden age. More ports are being built in the Middle East to handle increase transshipment and trade, including Halal trade. According to the Global Islamic Economy 2014-2015 report by Thomson Reuters and Dinar Standard, the Islamic clothing and footwear industry alone will increase 82 per cent to $484 billion (Dh1.7 trillion) by 2019 from 2013.

Pilgrims

Airports too are being expanded to handle increased traffic. More planes are on order, including the jumbo A380s to be used for Makkah shuttles. As it stands today, the Haj sees 3 million pilgrims annually and the Umrah sees 7 million pilgrims annually. This is the equivalent of 13 times the attendance of the 2012 London Olympics. Saudi Arabia is expanding Madinah’s holy Masjid an-Nabawi Mosque to hold 1.6 million pilgrims simultaneously up from the current maximum capacity of one million pilgrims. This is in anticipation of the increase in pilgrims to 17 million a year by 2025.

As of 2014, global financial institutions which are Sharia compliant represented approximately 1 per cent of the world’s total asset, highlighting the disproportionate value against the global Islamic population demography. The financial infrastructure is gradually being prepared — Malaysia continues to grow and lead in the domestic Islamic finance space, while sovereigns such as UK, Hong Kong and Luxembourg have raised debt through Sukuk for the first time last year. Dubai has to be highlighted for being the city with the most ambitious plans — To tie up all of these by becoming the capital of the Islamic economy.

Banking sector

The big constraint to all these is the lack of institutions educating the Muslim populace on how to deliver for such services and develop such industries. Take for example the banking sector — Banks compete for an extremely small pool of talent. Right at the top, there are less than 500 CEOs who have Islamic Banking experience at the highest level. Across all levels, the industry needs more staff as well. This lack of talent pipeline will impact the ability of product innovation, organic expansion and at the very base level providing of services to an expanded populace. The industry needs to come together to set up various international qualification boards to tackle this issue. We can perhaps set up a Masters of Islamic Financial Engineering programme to solve our dearth of trained talent in the Banking and innovation space.

As the Muslim world says Assalamu-alykum (May peace be upon you) to us, the world should reply with Wa-alaykum-asalum (And upon you may peace be) and Ahlan wa Salan (Welcome). During the holiest month of the year, may I wish all Muslims out there, Ramadan Kareem!

The writer is the Chairman, Standard Chartered Saadiq.

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