Before getting straight to the points, let’s get some of the definitions, facts and numbers quick.
Islamic Economy: A subset of global economy where consumers prefer to consume products & services according to their Islamic faith. Although the primary driver of this economic subset is the growing number of Shariah sensitive consumers, the beneficiaries of the products and services are not only Muslims because the three underlying values that uphold Islamic Economy transactions are justice, ethics, and morality – these are shared by all of humanity. Therefore the term ‘Islamic Economy’ should not be misunderstood as ‘Muslim Economy’ rather an economy of ethical, moral, and justice loving consumers.
The Sectors: Islamic Economy in an ideal form may consist of every consumable industries that are not in conflict with Islamic faith, however at this point of time, actionable data with significant growth potential are available for the following sectors:
- Islamic Finance: According to a recent projection by Al Huda Centre of Islamic Banking and Economics, Islamic Banking and Finance assets are projected to exceed $2.5 trillion by end of 2015.
- Halal Food: Muslim expenditure in halal food sector is projected to grow to $2,537 billion by 2019 and is projected to be 21.2% of global food expenditure. (Source: State of the Global Islamic Economy Report 2014/2015 by Thomson Reuters/ DinarStandard)
- Modest Clothing & Fashion: Muslim clothing market is expected to reach $488 billion by 2019 and will account for 11.9% of global clothing market expenditure by the same year. (Source: State of the Global Islamic Economy Report 2014/2015 by Thomson Reuters/ DinarStandard)
- Halal Travel & Tourism: By 2019 global Muslim travel market is expected to reach $238 billion which has increased 7.7% in 2013. (Source: State of the Global Islamic Economy Report 2014/2015 by Thomson Reuters/ DinarStandard)
- Media & Recreation: Global Muslim expenditure on media and recreation has increased 7.3% in 2013 and accounted for 5.3% of global expenditure in the category. The projection for halal media and recreation reveals that the sector will reach $301 billion by 2019. (Source: State of the Global Islamic Economy Report 2014/2015 by Thomson Reuters/ DinarStandard)
- Halal Pharmaceuticals & Cosmetics: Global expenditure on pharmaceuticals and cosmetics by Muslim consumers is projected to grow to $103 billion by 2019. (Source: State of the Global Islamic Economy Report 2014/2015 by Thomson Reuters/ DinarStandard).
For more details on the statistics, market opportunities, and growth potential please see State of the Global Islamic Economy Report 2014/2015 by Thomson Reuters/DinarStandard
21 Signs How 2015 is heading towards a monumental year for Islamic Economy >>>
Legal & Policy changes and New Entrants in Islamic Finance
#1. Russia’s lower house of parliament, The State Duma has reviewed a law and establishing a legislative framework to open its first Islamic Bank in Tatarstan, a Muslim majority republic of the Russian Federation.
#2. Moroccan central bank is working to introduce a law to allow local and foreign banks to set up Islamic Financial units and to allow its first fully fledged Islamic Bank in the country by September 2015.
#3. Germany is welcoming the first fully operational Islamic Bank in the country by granting license to Turkish bank, Kuveyt Turk Bank AG. The bank is expected to start operation by June 2015 with branches in Frankfurt, Cologne and Berlin.
#4. Japan’s Financial Services Agency is working on relaxing legal policies to allow introduction of Islamic Financial products and services in the country for the first time.
#5. The Central Bank of Afghanistan is establishing new regulatory framework that will allow Islamic Banking products and services to be offered in the country. The country hopes the new law will be adopted by June 2015.
Centralization of Shariah Boards towards Harmonious Shariah Supervision
#6. Central Bank of Bahrain is on its way to establish a central Shariah Board to supervise Islamic Banking products with country level approach to bring efficiency in operation and to harmonize the Shariah supervision process.
#7. United Arab Emirates aligned with its ambition to become global Islamic Economy hub, is planning to launch Federal Shariah Board by Third Quarter to unify contracts and standards in Islamic Finance industry.
Sukuk, Sukuk, Sukuk
#8. Read sukuk pipelines globally about sukuk issuances in 2015
Inclusion of Islamic Finance in Mainstream Forums
#9. IMF has officially endorsed Islamic Finance and started promoting Islamic Finance through its publication and videos. IMF also held a forum in April 2015 titled “Islamic Finance: Unlocking its potential and Supporting Stability’ in its annual event jointly organized by G20 and IMF. See full video of the forum here
Increased Promotional and Awareness Initiatives
#10. With the beginning of 2015, greater attention has been put on promotional efforts of Islamic Finance and Islamic Economy via Press Releases, Video Marketing, Social Media marketing – a promising sign to optimize the awareness efforts, remove misconceptions, and widening the appeal of Islamic Finance and Halal products.
#11. Live streaming has started to be utilized for awareness and promotion of Islamic Finance and Islamic Economy events. 10th International Conference of Islamic Economics and Finance held by Qatar Faculty of Islamic Studies for the first time in the conference history initiated live streaming of the event in March 2015. WIEF Cordoba Roundtable held in Cordoba, Spain in March 2015 also live streamed their event. More institutions and events are projected to follow suit in live streaming during the year as part of increased awareness and promotional efforts.
Development of Industrial Zones for Halal
#12. Wuzhong region in China is planning to build an international industrial zone for buying, processing and selling halal products. Wuzhong has 726,000 Muslims residing in the region .
#13. Dubai is planning to develop halal zones at Jafza and Technopark to attract companies that manufacture and trade halal products.
Increased focus in Talent Development & New Initiatives
#14. Talent development in Islamic Finance has been a critical need since the birth of Islamic Finance industry, yet initiatives do not suffice the quantity and quality of demand. With the development of halal sectors, talent development in Islamic Economy will be a new demand in near future. World Halal Summit held in April 2015 discussed the challenges and issues regarding talent development for halal sectors.
#15. Yurizk has launched the first crowd-learning platform, Yurizk Academy for specialized knowledge and skills transfer and talent development of Islamic Economy.
#16. IFSB launched databank of industry indicators to bring insight on Islamic Banking sectors.
#17. Dubai has initiated to launch second Global Islamic Economy Summit and Third state of Global Islamic Economy Report.
#18. An Islamic medical insurance scheme is launched in Malawi. Although new in concept, the idea may give rise to a new sector in Islamic Economy.
#19. China is looking to introduce Shariah compliant financial products with the help of Qatar.
#20. Turkey is hosting the largest halal tourism conference in December 2015.
#21. G20 has included sukuk as an agenda for infrastructure financing tool.