Onward to Islamic finance and halal industry 2020

Rushdi Siddiqui (Participation finance/Banking) / 2 December 2013.

Onward to Islamic finance and halal industry 2020

Onward to Islamic finance and halal industry 2020

In one week, Dubai hosted two major Islamic finance conferences — the Global Islamic Economy Summit, or GIES, under the patronage of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai; and the World Islamic Retail Banking Conference, or WIRBC.

At the GIES, Islamic Development Bank president Dr Ahmed Ali Madani was given the Lifetime Achievement Award for his contribution to the development of the Islamic economy. At the WIRBC, former prime minister of Pakistan Shaukat Aziz was given the Global Islamic Finance Leadership Award 2013.

Also in the same week, Dubai was voted as the host city of World Expo 2020 over three other G-20 countries, which were Brazil, Russia and Turkey.

This showcases two extremely important points: one, Dubai, as expected, has recovered from the effects of the global economic crisis and has created a more impactful buzz on the global stage; and, two, Islamic finance and the halal industry are back in the spotlight with a more interesting story with support of its core stakeholders — delegates and sponsors.

Query: Is Dubai an indicator for the pulse of Islamic finance and the halal industry going forward?

Altitude, attitude and aptitude:

At a jet-engine altitude of 35,000 feet, the $1.3 trillion Islamic finance and $2.7 trillion halal industries are the new Brics story — growth stories in growth markets with growth demographics. Thus, there is a story here for financial intermediation linked to the real economy, including halal, deploying savings into “ethical” investments and insuring all aspects of the above.

At a helicopter level of 3,500 feet, it’s about establishing the blueprint on the road ahead with sign posts. It’s not about making Islamic finance bulletproof from market forces, which cannot be done, witness lessons from the bankruptcy of Arcapita, but establishing an enabling infrastructure that allows for the internationalisation of the phenomenon.

At the the grassroots level of three feet, it’s about making it conventionally-efficient on financing (cost of capital/credit and longer tenure and terms), expanding bandwidth of investing asset classes (market performance, but de-coupling from conventional counterpart benchmarks), insuring (achieve size by consolidation and building re-takaful to address premium leakage and customer service (as status quo not acceptable).

It’s also about establishing an environment for innovation, which implies access to risk capital, like crowd funding as part of financial inclusion. It’s about good governance and transparency, as there is confidence crisis after the financial crisis. It’s about establishing human capital development, which is as important as standardisation for Shariah, tax, accounting and regulations.


The GIES exceeded venue capacity at Mina Salaam, with 3,000-plus delegates, and only a minor drop in attendance on the second day. There was a buzz and electricity in the atmosphere about Islamic finance and the halal industry that has not been seen, heard or felt in many years.

Emerging markets guru Mark Mobius from Franklin Templeton, clearly articulated that Dubai, a “new” normal, is the best place in the region for ease of doing business and for investments, and on par with many financial capitals.

The 21st-century thinking about the two niche markets is being slowly shaped by Dubai’s ambition of becoming the capital of an Islamic economy. It’s about “beyond” halal food and Islamic finance, as now we are defining, describing and (Muslims) demanding their own products and services.

It’s about (Muslim) consumerism and the hundreds of billions of dollars behind it, from farm, food, finance, fashion, pharmaceuticals, fragrances/cosmetics, travel, hospitality, supply chain logistics/distribution, and so on. The market is there, but the approach is haphazard, hence, the focus on certification and accreditation (for halal) and standardisation (for Islamic finance), i.e., rules of engagement and enforcement, is a good starting point.

Certification and standardisation provides linear progression. For example, it removes uncertainty, which provides efficiencies, resulting in economies of scale, that attracts new entrants with their liquidity that expands the market, providing basis for consensus (if not harmonisation), which then develops the market.

Thus, it can be said the birth of the Accounting and Auditing Organisation for Islamic Financial Institutions, or AAOIFI, in 1991 began the process of removing uncertainties for Islamic financial institutions.

But, the rules are only effective if they are clear, easily available and accessible, and consequences for non-compliance or deviation.

The halal industry has two possible ways forward: one, halal industry stakeholders follow the path and process of establishing their own AAOIFI; or, two, have the AAOIFI expand its mandate/bylaws to the include halal industry and top it up with additional resources. Furthermore, as the IDB is one of its founders, the Lifetime Contribution winner, Dr Madani, should be easy to approach.

Finally, as Dubai does not host any Islamic finance industry bodies, it’s a good opportunity for the winner of World Expo 2020 to have an immediate imprint and impact on the way forward for the halal industry.


Islamic finance got a facelift at the GIES, as many speakers challenged the status quo and injected the halal Industry as an asset class consideration. Today, Muslims (and non-Muslims) are consumer investors in halal company products; they should also be stock investors in the same companies.

A graph, comparing three MSCI indexes — world index, Islamic world index and food production index from 2009 to end of October 2013 — showed that the food index outperformed the Islamic index and us more stable than a conventional index, and it had higher dividend payout, hence, ideal defence sector play.

Furthermore, an opportunity exists to refinance the riba-based balance sheet of many halal companies with sukuk and insure them with Takaful, hence, end-to-end halal offering and convergence with Islamic finance.


Islamic finance and the halal industry are $4 trillion Brics-type opportunity, and countries embarking on getting a piece of it via Dubai Expo 2020 must start planning, including defining their role of a sunset market participant that becomes a market regulator.

The Expo is a great opportunity for both Islamic finance and sukuk, much like the 2022 Fifa World Cup.


UAE plans new body to oversee Islamic finance push

The UAE plans to develop an independent authority which will supervise the country’s Islamic finance industry, backed by specific legislation, central bank governor Sultan Nasser al-Suweidi has said.

UAE plans new body to oversee Islamic finance push

UAE plans new body to oversee Islamic finance push

A centralised approach to supervising Islamic finance is increasingly being adopted around the globe, as regulators try to standardise industry practices and improve consumer perceptions.

“We will have a sharia authority or a board, that will be outside the central bank,” Suweidi told Reuters on the sidelines of the World Islamic Economic Forum in London.
Legislation which is being developed by the UAE government would enhance the authority’s ability to influence industry practices.

“There is a law that is going to be out…I will not give a time frame but normally those take one year, one year and a half in the UAE,” Suweidi said.

Sharia boards are groups of scholars which rule on whether financial instruments and activities are religiously permissible. Gulf countries have in the past tended to follow a loose, decentralised model of Islamic finance regulation, leaving much of it to sharia boards at individual banks and finance firms.

But the rulings of different sharia boards can be inconsistent or leave scholars open to suggestions of conflicts of interest. So in recent months some countries, including Oman, Pakistan, Morocco and Nigeria, have followed Malaysia’s example by introducing a central sharia board that can impose its will around the country.

Dubai’s decision could help its drive to become a global centre for Islamic business; it wants to develop a set of standards, not just in finance but also in other areas such as halal food processing, which would become accepted internationally.


Dar Al Sharia named 'Best Sharia Advisory Firm' at Islamic Finance News awards for fifth consecutive year

Dar Al Sharia named 'Best Sharia Advisory Firm' at Islamic Finance News awards for fifth consecutive year

Dar Al Sharia named ‘Best Sharia Advisory Firm’ at Islamic Finance News awards for fifth consecutive year

DIB subsidiary also awarded ‘Best Islamic Consultancy Firm’ for fourth year in a row
Dubai, November 19, 2013
Dubai Islamic Bank ( DIB ) announced that its Sharia consultancy subsidiary, Dar Al Sharia Legal & Financial Consultancy LLC (DAS) has been named “Best Sharia Advisory Firm” and “Best Islamic Consultancy Firm” in the Islamic Finance News – Best Services Providers Poll 2013.

Established in 2007, Dar Al Sharia provides Sharia, legal and financial consultancy and advisory services for all types of Islamic finance transactions in the region and around the world. In a very short period, the firm has become one of the most renowned and trusted Sharia consulting firms globally.

The Islamic Finance News Best Service Providers poll honors leading institutions in the Islamic financial services industry. Dar Al Sharia has continued to win ‘Best Sharia Advisory Firm’ since 2009, and ‘Best Islamic Consultancy Firm’ since 2010.

“Over the past five years, Dar Al Sharia has continued to enhance its products and services by developing its enormous depth of talent, including Sharia scholars, lawyers, bankers, trainers and auditors. Winning both these awards consecutively over the years is indicative of how we have gained an unrivalled level of expertise in the industry and how we continue to exceed client expectations,” said Sohail Zubairi, Chief Executive Officer, Dar Al Sharia. “We are extremely honored to be recognized for our efforts in this regard and I would like to thank our customers for their continued confidence in our services, DIB for its strong support and the Dar Al Sharia team for the excellent performance over the years”.

About Dubai Islamic Bank :

Dubai Islamic Bank ( DIB ), established in 1975, is the first Islamic bank to have incorporated the principles of Islam in all its practices and is the largest Islamic bank in the UAE. DIB is a public joint stock company, and its shares are listed on the Dubai Financial Market. The bank enjoys a reputation as a leader and innovator in maintaining the quality, flexibility and accessibility of its products and services. The bank currently operates 85 branches in the


DIB has been proactive in creating partnerships and alliances at both the local and international level. The bank has established DIB Pakistan Limited, a wholly owned subsidiary which has a network of more than 100 branches across 36 major cities in Pakistan. DIB has also started operations in Jordan, with the establishment of Jordan Dubai Islamic Bank .

Alongside its accomplishments as a commercial organisation, DIB has always recognised its wider role in society. The bank supports the communities in which it operates through the DIB Foundation, a non-profit social, humanitarian and charitable organisation which distributes millions of dirhams to good causes at home and abroad each year.

DIB has earned the respect of its peers around the world for many years, and its leading position has been reaffirmed by the 104 local, regional and international accolades that it has won since 2008. DIB has won awards across diversified areas, including retail, corporate and investment banking, as well as CSR and consultancy services. The bank’s most recent awards include being named “Best Islamic Retail Bank, UAE”, “Best Sukuk Arranger” and “Best Islamic Credit Card” by Banker Middle East magazines, and being named “Best Sukuk House” by EMEA Finance Middle East Banking Awards 2012.

For further information, please contact:
Rawan El Saleh / Kanishk Mishra
Dubai, UAE
Tel: +9714-237-8000
Email: [email protected] / [email protected]

© Press Release 2013


Experts Gather To Debate And Address Skills Gaps In The UAE’s Islamic Finance Sector

In response to His Highness Sheikh Mohammed bin Rashid Al Maktoum’s ambition to make Dubai the capital of the world’s US$8 trillion Islamic economy in just three years, industry experts, government officials, and leading academics met today to discuss the existing and emerging skills gaps within the Islamic finance sector – one of the seven pillars of Dubai’s Islamic economy initiative.

Experts Gather To Debate And Address Skills Gaps In The UAE’s Islamic Finance Sector

Experts Gather To Debate And Address Skills Gaps In The UAE’s Islamic Finance Sector

The senior level debate, organised by Dubai International Academic City (DIAC) in collaboration with the organisers of the Global Islamic Economy Summit, Thomson Reuters, saw participants review the key findings of a Workforce Planning Study , which has identified some of the major themes and skills gaps within the fast-growing Islamic finance sector.

The Workforce Planning Study revealed that dedicated Islamic banking skills are in high demand from GCC banks, particularly at the entry level, closely followed by financial risk management and customer segmentation and analytics skills. Of the 60 banks surveyed;

• 50% said that they find it difficult to hire graduates for entry level positions.
• 23% said that they find it difficult to hire for mid-level positions.
• Just 5% of banks say that they find it hard to hire for senior positions.

The study also offers some critical recommendations about how the UAE can address the skills gaps arising from the sector’s growth, such as genuinely bridging the communication gap between industry and academia.

Commenting after the discussion, Dr. Ayoub Kazim, Managing Director of Dubai International Academic City and Dubai Knowledge Village said: “Islamic finance is a central pillar in Dubai’s strategy to become the world’s capital of the Islamic economy. Demand for skilled workers in this field has never been higher, and as a home for the region’s education and training institutes, we have an important role to play in bringing academia, industry and government closer together to ensure the future success of the sector.

“Roundtable debates such as these, informed by evidence found in the Workforce Planning Study, enable our academic partners and training institutes to tailor their education programmes to the demands of local business. This is a smart and forward-looking approach to education – and it is one that ties back to Dubai’s overarching vision of developing a thriving, knowledge-based economy.”

Essa Al Mulla, Executive Director, Emirates National Development Programme, Knowledge and Human Development Authority (KHDA), said: Islamic finance plays a crucial role in the UAE’s financial system. The debate not only highlights the existing skills shortage in the sector, but also provides a platform to discuss innovative ways to encourage sustainable and long-term skills development. At present, there are a number of institutions in Dubai offering programmes in banking and finance; however, we need programmes specialising in Islamic Finance.”

Rashid Mahboob, Senior Vice President, Customer Excellence at Dubai Islamic Bank, said: “This high level discussion offers an early insight into the skills gaps that exist within the Islamic finance sector, as well as how to nurture the human capital needed to meet the sector’s expected growth.

“In the future, there will be an increasing focus on excellence in all aspects of employment, and this will be particularly true for those working within Islamic finance. To prepare for this, universities and training providers must refine their programmes and courses to support the sector, equipping young talent with the level of specialism and sophistication that is required by employers. Similarly, employers must dedicate themselves to providing genuine on-the-job training.”

Professor Abdullah Al Shamsi, Vice-Chancellor of the British University in Dubai, during his presentation, observed: “According to PricewaterhouseCoopers, Islamic financial assets are growing 17% per year and are set to reach $2.67 trillion by 2017. These developments vouchsafe the growing significance of Islamic finance and banking in the aftermath of the global economic crisis.

“Clearly realising the market needs for trained manpower in this industry, the British University in Dubai has already initiated steps to introduce a full-pledged postgraduate program in Islamic economy and finance from the next academic year. Currently, we are preparing the necessary documents to be submitted to MOHESR for its inspection and approval.”

Initial findings from the ICD Thomson Reuters Islamic Finance Development Indicator report show that there are over 533 institutions globally offering courses or degrees in Islamic finance. The UAE sits in third position with 31 course providers and 9 degree providers, which is ahead of the US, Indonesia and Saudi Arabia, but behind the UK and Malaysia.

According to a recent analysis by Tahseen Consulting, a specialised advisor on strategic and organisational issues in the Arab world, US$87-124 billion could potentially enter the UAE Islamic banking system by 2015, creating approximately 7,800 new jobs at Islamic banks if the current asset concentration ratios remain similar. Additionally, 500 jobs will be created in other Islamic financial services segments. By 2015, the Islamic financial services sector will double in size from approximately 10,000 employees currently to 20,000.

DIAC and Thomson Reuters’ roundtable took place at the Dubai Knowledge Village Conference Centre. Some of the attendees included; Standard & Poor’s, Simmons & Simmons, Dubai Holding, Dubai Islamic Bank, Sharjah Islamic Bank, Abu Dhabi Islamic Bank, Dubai Financial Services Authority (DFSA), Imarat Consultants, the Knowledge and Human Development Authority (KHDA), and other DIAC academic partners.