Government support key for making Dubai an Islamic finance hub, say CEOs

The United Arab Emirates has been ranked as the world’s second most developed Islamic economy environment following Malaysia, according to a recent report by Thomson Reuters and Dubai authorities.

The report comes as the UAE – particularly Dubai – is aspiring to become a global capital of the Islamic economy by 2020. The emirate plans to focus on sectors such as banking and asset management, halal products and certifications, fashion, education, art and tourism.

However, for the industry to develop, experts say governmental support is essential.

Speaking to Gulf Business, Dubai Islamic Bank group chief executive officer Adnan Chilwan said development of legislation and regulation – particularly for Islamic finance and banking – was required.

“Creating the right products and tools to manage liquidity will also play a massive role in supporting Islamic banking and in turn the overall Islamic economy,” he said.

According to Abu Dhabi Islamic Bank group CEO Tirad Mahmood, Malaysia has remained the number one Islamic economy primarily because of government support.

“We are looking forward to what plans the governor of the UAE central bank has in store to create a hospitable environment to help promote Islamic finance. We want to be on par with the conventional banks – we have not been on par with them since the birth of Islamic banking. It is because of our loyal customers that Islamic banks have been able to grow. It is not because of the hospitality of the regulatory regimes,” he said.

Another element that needed to be addressed, both in Dubai and globally, for the industry to grow was standardised practices.

“Standardisation within the Islamic finance industry is still a key issue that needs to be addressed on an international level to make the global Islamic economy model more acceptable across international boundaries,” said Chilwan.

Although regional standardisation bodies already exist, adherence varies from region to region and nation to nation.

“There are three main branches within the UAE court system: civil, criminal and sharia or Islamic law which help manages cases within Islamic finance. The last one around, sharia law, needs further enhancement to safeguard the interests of all parties including the Islamic financial institutions,” added Chilwan.