Dubai is ideally positioned as a leading player in the Islamic economy. Certainly, it has well-established and flourishing trade, tourism, transport, logistics and financial sectors.
Therefore, as a vibrant trade hub connecting commodities in the East and West, Dubai is able reap the benefits of growing halal sectors.
“We are at the fulcrum of trade and investment flows between some of the fastest growing economies in the world in South Asia, Africa and the Middle East. 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 investments,” says Khamis Buharoon, acting CEO and vice chairman of Abu Dhabi Islamic Bank.
Robust growth of global Islamic economy
The global Islamic economy has grown to a US$2 trillion market traditionally driven by Islamic finance. However, it is now fast encompassing other key pillars. These pillars include halal food, travel, tourism, entertainment, art and culture, and fashion.
The robust growth witnessed by the sector stems from various factors. These include a fast-growing consumer base and strong regulatory support in Malaysia, Bahrain, the UAE and Saudi Arabia.
Importantly, since Dubai unveiled its ambition to become the global capital for Islamic economy, it has made significant progress.
According to Dubai Islamic Economy Development Centre, the Islamic economy sector contributed 8.3% to GDP in 2016 (Dh33 billion/US$8.9 billion).
The State of the Global Islamic Economy Report 2018/19 estimates that Muslims spent $2.1 trillion across the food, beverage and lifestyle sectors in 2017. According to research, spending in these areas may reach $3 trillion by 2023.
By category, food and beverage account for the largest share of spending with $1.3 trillion. This is followed by fashion ($270 billion), media and recreation ($209 billion), travel at ($177 billion), pharmaceuticals ($87 billion) and cosmetics ($61 billion).
Keeping pace with technology
Certainly, 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. Additionally, it helps to 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 attracting more investments.
Laurent Marliere, CEO of ISFIN, said the digitalisation of Islamic finance and how it competes will be key to success.
“The Muslim population is rather young and living in emerging markets where banks do not have substantial networks of physical branches. This implies that customers will necessarily be keen to bank on the Internet,” says Marliere.
To ensure sustainable growth of Gulf states’ Islamic finance sector, Marliere says banks must develop new products to existing customers. Additionally, banks must expand their offerings and reach to non-Muslim customers.
He added that interested parties can explore such business opportunities in neighboring markets within Asia and Africa.
Source: Khaleej TImes