30/08/2015 07:28 AST
The value of assets in the Islamic finance sector is expected to increase 80 per cent over the next five years, to hit $3.24 trillion in value by 2020, according to findings for an upcoming report.
The initial findings garnered from the upcoming State of the Global Islamic Economy (SGIE) report, which was commissioned and supported by Dubai Islamic Economy Development Centre in partnership with Thomson Reuters, and in collaboration with DinarStandard, will be published ahead of the second Global Islamic Economy Summit (GIES), to take place in Ocober in Dubai, UAE.
The 2015 summit, organised by Dubai Chamber, the Dubai Islamic Economy Development Centre (DIEDC) and Thomson Reuters, is set to gather more than 2,000 policymakers, thinkers and business leaders on October 5 and 6 at Madinat Jumeirah.
Islamic Finance has been considered the most developed sector within the various pillars of the Islamic economy. The growth in the global shariah-compliant economy is broadly measured by the value of Islamic finance assets.
Last year, Islamic finance assets had an estimated value of $1.8 trillion, with Islamic Banking representing 74 per cent of total shariah-compliant assets, followed by 16 per cent in outstanding sukuk based on ICD Thomson Reuters Islamic Finance Development Indicator (IFDI 2015).
According to Thomson Reuters’ projections, Islamic banking will constitute $2.6 trillion of the $3.2 trillion value of Islamic finance.
The total number of Islamic financial institutions operating globally has reached 1,143, divided between 436 Islamic banks/windows, 308 takaful institutions and 399 other Islamic financial institutions, such as financing and investment companies.
Most of these institutions are located in the GCC countries and Southeast Asia, while the others are distributed between other Middle East and North Africa (Mena) countries, South Asia and other regions.
Most Islamic finance assets, on the other hand are held by Saudi Arabia, Iran, Malaysia and UAE.
As global acceptance of Islamic finance continues to grow, more corporates and non-Muslim sovereigns are announcing Islamic finance initiatives such as ethical or shariah-compliant regulations, as well as products such as sukuk issuances.
This increased appetite demonstrates that the market is attracted to the benefits surrounding the ethical principles of Islamic finance, linking finance to physical assets, productive fiscal activities and real economic growth.
One of the key sessions at GIES 2015 will discuss the importance and relevance of the Islamic economy’s broader sectors to Islamic finance, featuring a debate by Tirad Al Mahmoud, Jamal Bin Ghalaita and Dr Adnan Chilwan, the respective CEOs of leading Islamic banks ADIB, Emirates Islamic and Dubai Islamic bank.
The chief executive officers (CEOs) debate will be followed by one of the key sessions of the summit, covering how Islamic financial institutions have moved from niche to mainstream by being part of the global agenda.
It will will discuss whether Islamic financial institutions can meet the needs of people who are financially excluded solely for religious reasons, and whether Islamic finance can act as a financial inclusion mechanism for non-Muslims
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