With $4.11 billion (Dh15bn) worth of sukuk, or Shariah-compliant bonds, listed on the Dubai International Financial Exchange, Dubai is ideally placed to play a leading role in Islamic finance, a senior official said on Wednesday.
“A risk-based Shariah systems regulator, regulations based on international standards modified for Islamic finance, and a legal environment based on common law provides certainty and familiarity. Such strong Shariah foundations and a familiarity with Islamic concepts and contracts will help to support the proper regulation and implementation of Islamic financial mechanisms,” Nasser Al Shaali, Chief Executive of the Dubai International Financial Centre Authority, told delegates at the World Insurance Forum in Dubai.
“One such mechanism that has recently started gathering momentum is the Islamic insurance and re-insurance sector – takaful and re-takaful. As the Arabic name indicates, it is based on the principle of co-operative insurance and mutuality. The global takaful market is expected to grow by some 15 to 20 per cent per annum to reach $7.4bn in annual contributions by 2015. In the GCC, there are some 23 takaful companies compared to 278 conventional insurance companies,” he said.
“Almost 30 years ago, Dubai pioneered modern-day Islamic banking. It is now one of the major centres around the globe for innovation in Islamic finance. Islamic finance is a $260bn international market, accounting for about 20 per cent of the world’s banking.”
The DIFC, Al Shaali said, is looking to compete and develop the takaful field, which is becoming increasingly appealing both regionally and internationally.
“Ultimately, our objective is to provide a full range of Islamic products and services, that offer similar benefits to conventional financial products, while adhering to Shariah principles.
“Since its inception nearly six years ago, the Dubai International Financial Centre has had a vision for the future. This vision is ‘opportunity’. By creating a world-class financial destination comparable to any of the world’s leading financial centres, we have created a unique opportunity for Dubai and its people, the region and the international community.
“We believe by building a strong regional economy, we’re creating the best opportunity for lasting social stability in the Middle East.”
A priority for the DIFC this year is to raise the profile of the regional insurance industry by promoting research, education, and training, Al Shaali said. “As a centre, we believe the region’s insurance industry needs to be developed. We wish to become the venue of choice for re-insurers, re-takaful, re-insurance brokers and insurance managers.
“In addition, we hope to establish a world-class captive domicile and become a centre for product development and an innovator in the field of risk management.”
Dubai to lead innovation in Islamic products