What does the future of the Islamic economy look like?

Summary

This video covers the growth and challenges of the Islamic economy, focusing on Dubai's ambition to become a global hub. Key highlights include insights into Islamic banking, fintech disruption, and the significance of Sharia-compliant bonds (Sukuk). Dubai's Islamic Economy Development Center CEO discusses competition from other cities like Malaysia and London. The video also explores the role of millennials and startups in shaping the future of Islamic finance, with a focus on fintech innovations in the UK and their impact on real estate and traditional finance.

Takeaways

• 🌐 Dubai aims to become a global hub for the Islamic economy.
• 📈 Islamic banking is forecasted to be worth $3 trillion by 2021, with Malaysia, Saudi Arabia, and the UAE as leading markets.
• 📊 Islamic finance has less than a 1% share of the global banking industry.
• 🚀 Dubai was ranked third globally for attracting listings of Islamic bonds in 2013, but is now number one.
• 📉 Growth in the Islamic banking industry has slowed in recent years compared to double-digit growth until 2014.
• 🏛️ The IMF will roll out regulations and guidelines for the growing Islamic banking industry.
• 💼 Islamic bonds, or sukuk, currently make up less than 1% of the world's bond market but offer less volatility and often higher returns.
• 💹 Dubai's Islamic economy contributed around 8.3% to its GDP in 2016, with expectations to grow higher when more sectors are included.
• 👥 Muslim Millennials are important to the Islamic economy strategy, with initiatives to support entrepreneurs and SMEs.
• 🇬🇧 London is embracing FinTech to maintain its position as a financial hub, with potential to disrupt the Islamic finance sector.

Q & A

What are the main goals of the Dubai Islamic Economy Development Center?

The Dubai Islamic Economy Development Center aims to make Dubai a global hub for the Islamic economy. It focuses on boosting responsible investment in the industry, promoting halal entrepreneurship and innovation, and expanding key sectors like Islamic finance, halal travel, and modest fashion.

What is Islamic banking and how does it differ from conventional banking?

Islamic banking follows Sharia guidelines, which prohibit interest on loans. Instead, it focuses on profit-sharing arrangements. The industry has grown significantly over the past 50 years, reaching new levels of maturity.

Which countries are leading the global Islamic banking industry?

Countries like Malaysia, Saudi Arabia, and the UAE are leading the Islamic banking industry. Despite its rapid growth, Islamic finance remains relatively small compared to the global banking sector, holding less than 1% of the market share.

What challenges does the Islamic finance industry face in terms of regulation?

The Islamic finance industry lacks standardization, as many institutions follow their own rules. Experts suggest that introducing industry-wide regulations could boost investor confidence and encourage more players to enter the market.

What is the significance of Sukuk (Islamic bonds) in the global bond market?

Sukuk currently makes up less than 1% of the global bond market but is considered less volatile than conventional bonds. Sukuk often provides higher returns, and demand for corporate and sovereign issuances is expected to remain strong.

What role does the Islamic economy play in Dubai's post-oil economic vision?

The Islamic economy is a key pillar in Dubai's post-oil economic strategy. Sectors like Islamic finance, halal products, and halal travel contribute to the emirate's GDP, and the goal is to further develop these sectors as part of Dubai's diversification efforts.

How important are Muslim Millennials to the growth of the Islamic economy?

Muslim Millennials are crucial to the growth of the Islamic economy, particularly in driving innovation. The Dubai Islamic Economy Development Center has launched initiatives, such as supporting FinTech accelerators, to engage young entrepreneurs in contributing to the industry.

What impact has FinTech had on the Islamic finance sector?

FinTech has been disrupting the Islamic finance sector by introducing new, Sharia-compliant financial products and services. Startups like Yielders, which focuses on Sharia-based crowdfunding for property investments, are examples of how FinTech is shaking up traditional Islamic finance.

How does the UK fit into the global Islamic finance industry?

The UK plays a significant role in the Islamic finance sector, being the first Western nation to issue a sovereign Sukuk bond. The country is also leveraging its position as a global financial center to support the growth of Islamic FinTech.

What are the concerns about the UK losing ground in the Islamic FinTech space?

There are concerns that the UK might lose ground to competitors like Dubai and Bahrain in the Islamic FinTech space. Although the UK is strong in terms of talent and regulation, it has been lacking in capital, which is necessary to support the growth of Islamic FinTech.