As I was on DIFC’s Islamic Finance Advisory Council (2007) and presently on Malaysia’s Securities Commission International Islamic Advisory Council, hence, a number of colleagues have asked me about the recent announcement by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
Shaikh Mohammed, stated: “Our cosmopolitan outlook to doing business continues to be our economy’s driving force. Adopting a modern and scientific framework for Islamic economies worldwide, here in Dubai, meets the demand from local, regional and international investors for a central hub to invest, grow and do business.”
More specifically, the announcement said: “... set up a comprehensive platform of Islamic economy products and services aimed at integrating Islamic economy as part of the overall Dubai economy. The platform includes Islamic finance instruments, Islamic insurance, Islamic contracts’ arbitration, Islamic food industry and trade standards (Halal food), and Islamic quality management standards.”
Integrated and holistic
If one looks at the announcements from Dubai Inc in last few weeks:
1. The massive Mohammed bin Rashid City, compromising of culture, entrepreneurship, retail and tourism.
2. ‘Dubai plans to create an Islamic finance council to regulate Shariah-compliant equity and fixed income products to boost the industry’s role in the economy.’
3. DFM, Dubai Financial Market, ... invites experts to counsel on its ‘standards for issuing, acquiring and trading sukuk,’ slated for discussion and issuance in March 2013.
4. Shaikh Mohammed’s announcement included the reference to the $640 billion Halal industry, ‘Dubai also seeks to develop Islamic quality standards for Halal food approval. This will encourage the food industry and promote linkages with global and regional businesses, as well as different business sectors including transport, storage and handling.’
The approach to an Islamic economy requires a broader understanding that banking and finance is just one element (important lubricant) for economic development and diversification. It (banking) is not the economy itself, but it play roles of an intermediary, and, in a well diversified economy, say, a developed G-20 countries, the financial sector, in an equity index, has about 20-25 per cent weighting, not 40-55 per cent.
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