Dubai, the second-biggest member of the United Arab Emirates, 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.
Dubai, which derives about 11 percent of economic output from financial services, wants to make Islamic finance a “core industry,” Sami Al Qamzi, director general of the Dubai Department of Economic Development, said at a conference in the emirate today.
“The addition of Islamic industry is a priority to turn Dubai into the capital for the Islamic economy,” Al Qamzi said. The emirate will seek to encourage the development of a market for Islamic products including funds, sukuk and loans, he said.
Dubai became a regional hub for finance when it opened a financial center in 2004 to attract international banks, asset managers and insurers with promises of a zero-tax environment for 50 years. Global Islamic financial assets may double to as much as $3 trillion by 2015, Standard & Poor’s said in September. Governments and companies in the Gulf Cooperation Council are taking steps to boost their share in the business.
“We want to focus on several core issues such as Islamic finance, Islamic insurance, the arbitration of Islamic contracts” and marketing Muslim food products, known as halal, Al Qamzi said. Dubai also wants to establish Islamic standards “for trade and industry and product quality,” he said.
Shariah-compliant bond sales in the six-nation GCC tripled to $21 billion last year as yields dropped to all-time lows, according to data compiled by Bloomberg.
Dubai’s economy is recovering from a property market crash, triggered by the 2008 global credit crisis, which sent home prices tumbling more than 65 percent. The city, which was on the verge of defaulting in 2009, witnessed a pickup in tourism last year, with hotel and restaurant industries expanding 16 percent in the first half, set for the fastest annual growth since at least 2007.
Financial industries grew 4.6 percent in 2011 after contracting 1.3 percent a year earlier, according to the latest data on the Dubai Statistics Center website. In 2007, the industry had expanded 29 percent.
The government’s initiative “will create an environment that encourages Islamic investment in essential sectors not just the financial sector,” Hussain Al Qemzi, chief executive officer of Noor Islamic Bank, said today.