The islamic finance industry will continue to grow strongly as the value of assets is expected to increase by 80 per cent to reach $3.24 trillion over the next five years, according to initial findings of State of the Global Islamic Economy (SGIE) report.
The report, which is commissioned and supported by Dubai Islamic Economy Development Centre (DIEDC) in partnership with Thomson Reuters, and in collaboration with DinarStandard, will be published ahead of the second Global Islamic Economy Summit (GIES), taking place in Dubai this October.
The 2015 summit, organised by Dubai Chamber, DIEDC and Thomson Reuters, is set to gather over 2,000 policymakers, thinkers and business leaders on October 5 and 6 at Madinat Jumeirah, Dubai.
Islamic finance is 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.
In 2014, 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 finance is expected to grow to reach $3.2 trillion by 2020, with Islamic banking constituting $2.6 trillion of this figure.
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 Islamic finance institutions are located in GCC countries and Southeast Asia, while the others are distributed between other Mena countries, South Asia and other regions. Most Islamic finance assets are held by Saudi Arabia, Iran, Malaysia and the 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 of the Islamic economy's broader sectors to Islamic finance. It will feature a debate by Tirad Al Mahmoud, Jamal Bin Ghalaita and Dr Adnan Chilwan, the chief executives of leading Islamic banks Abu Dhabi Islamic Bank, Emirates Islamic and Dubai Islamic Bank respectively.
The 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. The session 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.
The GIES 2015 is taking place under the patronage of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. Featuring more than 60 international speakers across 15 sessions, the summit will offer insights on the seven pillars of Islamic economy: Islamic finance, halal industry, family tourism, Islamic knowledge, Islamic arts and design, Islamic digital economy and Islamic standards.