Thomson Reuters has reported the findings from its Islamic Finance Development Indicator (IFDI). The indicator measures five key components – quantitative development, governance, social responsibility, knowledge and awareness. Based on this analysis, the IFDI has found that Saudi Arabia has the second largest Islamic finance sector, after Malaysia, with Islamic finance assets in excess of $270 billion in 2012. This consists mainly of Islamic banking assets of $217 billion, Sukuk of $22 billion and Islamic funds of $18 billion.
Supplicating pilgrim at Masjid Al Haram, Makkah, Saudi Arabia (CREDIT Ali Mansuri )
Saudi Arabia was also in the top ten countries for educational infrastructure, with seven universities offering degrees and 22 institutions offering courses in Islamic finance. In terms of research published in the last three years, the kingdom had 12 research papers, of which nine were peer reviewed.
Saudi Arabia also performed well in terms of awareness, with 670 news articles, two conferences and seven seminars dedicated to Islamic finance in 2012. In terms of Sharia governance, the Kingdom has 40 Islamic finance scholars, making third behind Bahrain (53) and Malaysia (47).
However, it did not fare as well in terms of governance. Saudi Arabia has yet to introduce dedicated regulations for Islamic finance institutions and continues to score poorly in terms of financial disclosures compared to its peers.
Russell Haworth, Managing Director, Middle East & North Africa, Thomson Reuters, said, “This indicator, the first of its kind for the Islamic Economy, will provide companies with much needed unbiased and reliable multi-dimensional analysis regarding the development of the Islamic finance industry. The development of Islamic finance infrastructure will be a key driver for the establishment of the Islamic finance industry.”
Khaled Al-Aboodi, Chief Executive Officer, Islamic Corporation for the Development of the Private Sector, said, “Today’s findings are a perfect example as to how and why the IFDI can identify the critical growth components of the Islamic Finance industry. As expected, Saudi Arabia sits at the forefront of the Islamic finance industry and is a leading hub in many categories. However, our research also identifies areas of focus that require improvement, particularly governance aspects, to bring the country in line with other Islamic finance hubs.”
Dr Sayd Farook, Global Head of Islamic Capital Markets for Thomson Reuters, said, “Unlike most commentaries on Islamic finance that simply focus on assets and performance, the IFDI provides equal importance to all aspects of the industry when assessing its depth and development. Our initial research indicates, as expected, that Saudi Arabia is one of the leaders in the Islamic finance industry in most dimensions, but identified governance as a key area for improvement. This research will enable policy makers and practitioner to compare themselves with their peers and prioritise areas that require development.
Thomson Reuters is committed to leading the charge in information and analysis to support the global Islamic finance industry, with Saudi Arabia continuing to be a key country of focus.”
The IFDI was developed in collaboration with the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IDB). The IFDI will be officially launched at the Global Islamic Economy Summit.