In October 2013, Sheikh Mohammed bin Rashid, Vice President and Prime Minister of the UAE and Ruler of Dubai, committed the emirate to a three-year timetable with the ultimate aim of making it the capital of the global Islamic economy.
The Global Islamic Economy Summit, which got under way yesterday, provided a useful opportunity to gauge Dubai’s progress towards the very challenging target set by the ruler.
It was an ambitious goal and a challenging deadline. There are an estimated 1.6 billion Muslims in the world, and about 50 countries that have a Muslim majority.
The global Islamic economic “spend” is estimated at US$1.9 trillion across sectors such as food, travel, fashion, pharmaceuticals, retail and leisure. The value of assets in Islamic financial institutions is calculated at about $2tn in the most recent analysis by information group Thomson Reuters.
It is apparent that dominating such a huge but disparate market would be a difficult job for any single country, even one with the can-do attitude and ambition of Dubai.
And there was competition. Malaysia was regarded back then as the leading Islamic economy in the world; London dominated in Islamic financial products; other Gulf states laid claim to pre-eminence in Sharia standard-setting, crucial for the development of a global industry.
On the sidelines of the summit, one of the leading architects of the strategy of the past three years – who did not wish to be identified in print – gave a candid assessment of Dubai’s progress over that period: “I’d say we are 80 per cent of the way towards becoming the dominant force in the world Islamic economy.”
We’ve made great progress in a short space of time, but I think there is still some work to be done before we can claim No 1 position.”
He thought that Dubai continued to lag behind in food manufacturing, despite progress towards setting up a standardised authentication and certification process.
The global halal food industry remains fragmented and the lack of a unified standard has dissuaded large multinationals from entering the sector.
This issue is peculiar to the food industry and will remain problematic as long as there are fundamental differences of taste.
Nonetheless, there are things the UAE can do to make it more of a global halal food hub.
A recent disagreement with a European beef supplier, which led to the closure of the European plant and suspension of imports to the UAE, is a case in point.
The other area where my source thought there was more work to be done is in finance. Make no mistake, there has been great progress in this area, the single most valuable sector in the global Islamic economy.
Dubai – via the Nasdaq Dubai market – has overtaken Malaysia and London as the world’s leading centre for trading in sukuk (Islamic bonds), and the UAE’s Islamic banks are the strongest in the Arabian Gulf region.
But there is much more that could be done. A constant complaint from Islamic financial practitioners recently is that there remain too many Sharia authorities in the Middle East but that, perversely, there are not enough Sharia scholars who understand the modern financial world.
The need is for a training academy that can meet the needs of the world of modern Islamic finance.
Again, Dubai has done a significant amount of work in this respect, setting up professional bodies in Islamic banking and finance in the emirate. But more needs to be done.
One senior expert who was prepared to go “on the record” in this respect was Tirad Al Mahmoud, the chief executive of Abu Dhabi Islamic Bank.
“We are late, we need to move much more quickly. This is a crucial issue for 2017,” he said.
The unified Sharia board announced by the UAE Central Bank is a good start and international bodies such as the IMF and World Bank are thought to be considering a push to further standardise Islamic finance.
The UAE has long wooed these institutions and stands to benefit from any such move.
If Dubai can sort out food and finance, that could quickly propel it the extra 20 per cent. It is already a regional leader in trade, travel and tourism, fashion, and retail and leisure.
The three-year plan was ambitious and perhaps unachievable in full.
But the strategy has given the UAE an unassailable lead in the race to lead the Islamic economy. Now for one last push.
fkane@thenational.ae
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