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Which points will GIES 2015 be focusing on this year?
GIES 2015 will mark a new stage in the emergence of the Islamic economy industry. The summit will showcase the growth DIEDC witnessed in various sectors over the last two years, increasing global interest in new forms of investment in the Islamic finance industry, and ongoing efforts between various jurisdictions towards harmonizing Islamic standards. Under the slogan 'driving innovation, unlocking potential', GIES 2015 will gather global experts and business leaders to exchange success stories and initiate creative ideas to drive the growth of the Islamic economy and explore new avenues for investments.
What are the goals which you hope GIES 2015 will achieve?
First and foremost, the summit should pave the way for a better synergy between the various Islamic economy sectors. GIES 2015 also aims to create a forum for sharing best practices in order to harness the opportunities latent in the Islamic economy. If we really want to build a better, sustainable future to empower the next generation, we should all work to realize the potential that the Islamic economy offers through real and tangible investments that can also help shield the global economy from future crises. The UAE - and Dubai's - vision for diversification, innovation and a knowledge economy is core to the DIEDC strategy. A robust infrastructure for the Islamic economy can benefit not only the national economy, but also the wider region and the world. GIES 2015 is one of the strategic initiatives that aims to achieve this mission.
What is the objective of the 'Innovation 4 Impact' competition, to be inaugurated at GIES 2015?
Innovation is key to business development, especially in Islamic economy, and constitutes one of the main pillars of Dubai's vision to become the Capital of the Islamic economy. Considering that the Muslim population constitutes 23% of the global total population and is concentrated in some of the fastest-growing parts of the world, there's a great opportunity for youth to contribute to the growth of the countries they live in.
Since 89% of UAE businesses regard innovation and new business models as strategic priorities to help drive business growth, the 'Innovation 4 Impact' competition has been created by Dubai Silicon Oasis in collaboration with Thomson Reuters with the support of DIEDC to reinforce start-ups and businesses in the Islamic digital economy. The initiative serves as an incubator for SMEs across the world and will help develop technology ventures in the UAE and wider region.
Is DIEDC going to announce any initiatives at the Event? Can you give us an idea about these?
DIEDC works closely with its partners and shareholders to develop and implement new ideas. Together with our strategic partner Thomson Reuters, we will be launching the new global portal for the Islamic economy that represents a holistic information resource to support the growth of the sector. The need for such a resource is vital given the number of internet users from Muslim countries, this number is set to reach one billion by 2020, with 170 million users in the Middle East and 531 million users across South East Asia. The new portal, along with other new initiatives currently under development, will reflect the UAE's efforts to shape a knowledge economy through leveraging the latest in technology and innovation.
How has Dubai strengthened its role as a world leader of the Islamic economy since Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai launched the initiative in 2013?
The initiatives launched so far by various stakeholders have strengthened Dubai's position globally as a prominent destination for Islamic investments. The latest milestone achieved was the surge in sukuk listings on Dubai's exchanges to US$36.7 billion in 2015, which has helped Dubai surpass the world's three traditional sukuk centers - Malaysia (US$26.6 billion), the Irish Stock Exchange (US$25.7 billion) and the London Stock Exchange (US$25.1 billion).
Dubai continues to gain trust of international and local investors and business leaders in the halal sector. In a very short time, the Emirate has become one of the world's pivotal trading hubs. With the development of halal trade, through JAFZA and Dubai Exports, Dubai is today the world's third largest re-export hub, after Hong Kong and Singapore. In addition, support for the manufacturing sector - the fourth largest sector in Dubai's economy - and investments in halal products have offered a promising future for global private companies active in the Islamic industry. The UAE Halal Mark created by ESMA (Emirates Authority For Standardization & Metrology) was an integral step towards achieving this milestone.
What are the most critical issues affecting the development of the Islamic economy today?
Since the launch of the initiative, we recognized the need to synergize the sectors of the Islamic economy as its diverse elements have an inherent relationship with each other as parts of a greater whole. This is why the dissolution of the silo walls between some sectors, such as between food and finance, is needed to ensure the maturing of the Islamic economy. Our holistic approach had anticipated the tremendous potential of Islamic finance to build global opportunities for synergistic growth. I think Dubai has a historical opportunity to lead this trend as the emirate has developed a comprehensive strategy encompassing all sectors under one umbrella. There are still many gaps to fill, especially in developing a robust ecosystem for human resources. Competencies, highly-skilled professionals and local expertise remain crucial to Dubai's leadership in the Islamic economy world.
How do you think Islamic finance can balance the need for ensuring Shariah compliance vs. the demanding consumer?
The core philosophy of the Islamic economy is to achieve economic development based on tangible investments that reflect the ethics and principles of justice, transparency and greater public good. We strongly believe that the global financial crisis was caused by extraordinarily high liquidity, reckless lending, and uncontrolled growth of financial engineering under the pretext of meeting the needs of a 'demanding consumer'. The result was the creation of complex and opaque financial instruments used for unsustainable risk transfers. Many believe that the economic crisis would not have occurred under an Islamic financial system - due to the fact that most, if not all, of the factors that have caused or contributed to the crisis are not allowed under the rules and guidance of Shariah.
The global financial crisis has both tested the resilience of the Islamic financial services industry and illustrated its ability to present itself as a more reliable alternative to the conventional international financial system. The ability to withstand this shock and eventually to emerge as a more equitable and efficient system has raised the profile of Islamic finance and underscored its capacity to provide stability in the face of challenging economic circumstances.
Islamic finance can make a meaningful and enhanced contribution toward economic growth and prosperity in developing countries. The growth in the global Shariah-compliant economy is broadly measured by the value of Islamic finance assets. These are projected to grow to reach US$3.2 trillion by 2020, with Islamic banking alone constituting US$2.6 trillion.
With its strong capital base, Islamic finance has the potential to be a key driver in dismantling economic barriers to trade and capital flows across the globe. The findings of the Global State of the Islamic Economy Report 2015/2016 forecasts significant growth in the halal sector expenditure. It also indicates, for instance, that family tourism is expected to grow by 8.6% to reach US$233 billion by 2020, while halal food sector expenditure is expected to grow by 5.8% to reach US$1.59 trillion by 2020.
Part of DIEDC's role is to act as a catalyst for discussion on the best ways to address the challenge of access to Islamic capital. We are working with various stakeholders, including regulators and Islamic financial institutions on ways to make it easier for those seeking Islamic capital - from start-ups and SMEs to multi-nationals - facilitating access to the funds they need to grow successfully.
What are the necessary steps which need to be taken further to reach a sort of consensus regarding standardization of the halal food industry?
Dubai has taken a great step in this regard by developing the Halal Mark through the Emirates Authority for Standardization and Metrology (ESMA). This initiative has enhanced the emirate's position as a brand leader in the global certification space.
More work has to be done with global jurisdictions to reach a certain consensus on halal standards. Dubai is fully aware of the benefits of standardization of Islamic products, which include time and cost savings, financial stability, greater transparency and consistency in financial reporting, and improved public confidence. Standardization would take the compliance burden off of product developers' shoulders. It also enables increasing cross-border marketability, as currently a product considered to be compliant in Malaysia, may be rejected by GCC scholars or customers, and vice-versa. We are very optimistic about the future of halal as our efforts towards the harmonization of Shariah interpretations along with mutual recognition are at an advanced stage and increasingly accepted by most of the entities we approach across the globe.
What role can the private sector play in driving Dubai's ambition to be a capital of the Islamic economy?
It has been proven that a well-diversified economy has helped the UAE outpace the growth of most of its GCC peers in the past few years. According to the Washington-based Brookings Institution's Global Metro Monitor, 'no metropolitan area grew faster relative to its national economy than Dubai, where the business and financial services sector helped drive 4.5 per cent growth in GDP per capita.'
Dubai is ranked number five among the list of elite global metropolitan cities fuelling global economic growth. While economists agree that this year's GDP growth rate will be less than last year's, we believe that Islamic economy offers tremendous opportunities for investors in family tourism, halal production and trade, and Islamic finance. The hosting of Expo 2020 provides a further opportunity for the UAE to encourage more international businesses to lay down roots.
What are the steps you are taking to strengthen your partnership with the private sector in this regard?
DIEDC has been active in strengthening economic ties with the private sector. For example, our partnerships with major global institutions have been successful in fostering the knowledge sector which is crucial to the development of Islamic economy. Our stakeholders have also secured strong partnerships with prominent entities locally and abroad and attracted investments in family tourism and halal trade. Ongoing talks on other ideas and investment opportunities will come to fruition within the next few years.
© Business Islamica 2015
