While there are various major centres of the Islamic economy, all in Asia, it could be Dubai to emerge as the leader in the next phase of the evolution of Sharia compliant sectors, including finance and insurance, Halal food and lifestyle, and travel, according to a summary of Thomson Reuters’ first State of the Global Islamic Economy Report 2013, which will be released on Monday at the first Global Islamic Economy Summit in the emirate.
Malaysia, considered to be the strongest centre of an all-round Islamic economic sector, may have reached a point of “stagnation” and so, Dubai, with a clear goal of establishing itself as the centre of a global Islamic economy, looks to be one with the biggest potential, says the summary. The other major centres are Saudi Arabia, Turkey and Indonesia.
In fact, On October 5, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, had announced the unveiling of a plan for “capital of Islamic economy’ for the emirate.
“The continued developments and changes in the global economy increase the need to constantly diversify the structure of our national economy,” said Shaikh Mohammad at the time, according to WAM. “Our firm principle in the UAE is not to rely on one single economic resource or sector. The Islamic economy is not new to us, in fact, we have accumulated considerable expertise in this field and our aim is the global arena.”
Globally, opportunities for Islamic capital lie not just in furthering Islamic Finance, which is now well established across geographies, but also, identifying other sectors of the economy, including Halal food and lifestyle, the potential of which could make Sharia compliant economic system a potent alternative, according to the Report summary.
With Muslim consumer expenditure globally on food and lifestyle sectors around $1.62 trillion in 2012 and expected to reach $2.47 trillion by 2018, the report sees that as a potential core market for Halal food and lifestyle sectors.
In the Islamic financial assets arena, “currently estimated to be $1.35 trillion in total disclosed assets (2012) and growing at 15 to 20 per cent a year in most core markets,” the report further states that the potential of this sector could go up to $4.1 trillion.
“While these Islamic economy sectors are potentially large in size, the synergistic opportunities for growth and investments are larger and could even be a necessity in true realisation of their individual visions,” the Report’s author Sayd Farook, Global Head Islamic Capital Markets at Thomson Reuters, said in the statement released today.
The key drivers that are shaping the growth of the Sharia-based economy comprise four each on the side of the Islamic market and four global ones.
On the Islamic side are attractive demographic, religious value-driven consumption, Muslim majority comprising the fast growing emerging frontier countries, and growing intra-OIC (Organisation of Islamic Cooperation) trade. On the global front, participation of global multinationals in the Islamic economy, including major banks and food companies, developed economies seeking growth markets, increasing focus worldwide on business ethics and global communication technology revolution.
The other major sectors of Islamic economy include clothing, pharmaceutical / cosmetics and media recreation.