Global Islamic banking activities to continue apace in 2016

• Global Islamic banking assets expected to reach US$1 trillion in 2015
• By 2020, the global Islamic banking industry profit pool is expected to reach US$30.3 billion
• Islamic retail and commercial banking assets continue to grow at 16% in 2014 and 2015
• Islamic banking assets in six key markets set to exceed US$801 billion in 2015
• Gulf Co-operation Council (GCC) countries added US$91 billion in shari’ah compliant assets in 2015
• Approximately 80% of international banking assets are based in Qatar, Indonesia, Kingdom of Saudi Arabia (KSA), Malaysia, UAE and Turkey (denoted as QISMUT)

The World Islamic Banking Competitiveness Report 2016*, which aims to inspire and inform the business strategies of Islamic banks through specific, actionable insights, has been published by EY. According to the consultancy, global Islamic banking assets are expected to reach US$1 trillion in 2015, with the profit pool for the global Islamic banking industry reaching US$30.3 billion by 2020.

Source: EY. 

Islamic banking continues to be upbeat, as assets are growing at 16% in 2015. EY said that GCC countries added US$91 billion in shari'ah compliant assets in 2015, with the lion's share (80%) coming from the QISMUT region - comprising the countries of Qatar, Indonesia, KSA, Malaysia, UAE and Turkey. The nine core markets — Bahrain, Qatar, Indonesia, Saudi Arabia, Malaysia, UAE, Turkey, Kuwait and Pakistan together account for 93% of industry assets,
estimated to exceed US$920 billion in 2015, notes Abdulaziz Al Sowailim, Chairman and CEO of EY MENA.

Al Sowailim listed several broad trends which will drive growth and change for the Islamic banking sector, including:

• Large Muslim populations in 10 of the 25 rapid-growth markets (RGMs) currently reshaping the world economy 
• The coming together of ASEAN Economic Community (AEC) in 2015 
• Falling oil prices, jobs-for-nationals and economic diversification in the GCC
• The launch of the China-led Asian Infrastructure Investment Bank (AIIB)
• China’s Belt & Road Initiative

“Leading Islamic banks have done well to mainstream with a competitive, sizeable business in their home markets. The combined profit pool of Islamic banks across QISMUT was estimated at US$10.8 billion in 2014, which is a notable milestone. However, the return on shareholder equity could be significantly enhanced, by at least 15% to 20%, and this need becomes more pressing in the context of the prevailing macro-economic environment," said Ashar Nazim, Partner, Global Islamic Banking Center, EY.

“The external operating environment is certainly getting tougher, given the prevailing oil price and the resulting impact on banking system liquidity and infrastructure spend. Islamic banks are in a better position to weather this storm due to the simpler nature of their balance sheets, basic products and localised operations. However, they do not appear to be ready for the digital changes that are impacting the way customers engage with banks. A fundamental review of their operating models at this stage will be critical to the success of Islamic banking across the Organization of Islamic Cooperation markets,” added Muzammil Kasbati, Director, Global Islamic Banking Center, EY.

Interested?

Download the report (PDF)

View more infographics (updated to 2014) and dive into country reports

View the Suroor Asia blog post on the 2014-2015 report

*Global Islamic banking assets are estimated based on publicly available data from 15 participation banking (Islamic banking) markets. The research and insights are primarily based on the EY Participation Banking Universe (EY Universe), which is proprietary, based on samples and is not meant to be fully exhaustive. The EY Universe analysis covers 69 participation banks and 45 conventional banks across participation banking markets. Insights are also based on interviews with banking executives and industry observers, to identify key trends, risks and priorities. Limited disclosures on participation banking windows, subsidiary operation and offshore businesses was a limiting factor.

APAC leads the global market for fish and seafood

Technavio estimates that the global fish and seafood market will grow at a CAGR of 4% between 2016 and 2020, and valued at US$260 billion by 2020. One of the major factors leading to the rise of the fish and seafood market is the increasing demand for processed seafood, Technavio said. 

The Asia Pacific region leads the global market for fish and seafood, accounting for 40% of the overall market share. The primary growth factors in this region 

is the rise in population plus a large number of people who consume fish. Countries like China, India, Japan, Thailand, Australia, Bangladesh, Singapore, and Malaysia are the key contributors here. 

“Aquaculture is the fastest-growing food production process worldwide. It has surpassed commercial fishing as well as various other food-sourcing methods, thanks to improved logistics and the growth of the retail sector. Vendors are constantly coming up with new species to decrease the dependency on imports and maintain balance on over-exploited fisheries,” says Vijay Sarathi, Lead Analyst, Food & Beverages, Technavio Research.

The fresh and chilled fish and seafood segment dominated the market in 2015 in terms of revenue. Growing health consciousness, increased demand for quality food, and changing demographics are the main factors fuelling the growth of this segment, Technavio said.

The leading vendors in the global fish and seafood market include High Liner Foods, Iglo Group, Leroy, Marine Harvest, and Thai Union Frozen Products. With the existence of intense competition in the global fish and seafood market, vendors are reducing their prices and actively acquiring smaller entities to enhance their footprint in the market. The inflow of private labels - companies whose products are labelled with their customers' brands - is on the rise, making competition fiercer.

Interested?

Buy the Global Fish and Seafood Market 2016-2020 report. 

State of Global Islamic Economy Report outlines challenges across food and lifestyle markets

The global halal food and lifestyle sector is expected to grow at a CAGR of 6% by 2020, according to the State of the Global Islamic Economy Report 2015/2016, commissioned and supported by the Dubai Islamic Economy Development Centre (DIEDC) in partnership with Thomson Reuters and in collaboration with DinarStandard.

The global Muslim market spent US$142 billion on travel in 2014, and is expected to reach US$233 billion by 2020. The most popular destination countries for Muslim tourists are Malaysia, Turkey and the UAE, which is outpacing other countries in terms of hotel development. To meet that growth, new channels are being created, such as HalalBooking.com, a travel search and booking website for halal-conscious travellers.

Although the halal travel market segment is expected to grow at a CAGR of 8.6% by 2020, some investors are still reluctant to invest in "Muslim-friendly" hotels for fear of revenue loss associated with not serving alcohol. Banqueting, however, is considered a viable alternative revenue-generating option for Muslim-friendly hotels. According to Riyanto Sofyan, CEO of Sofyan Hotels, "The halal tourism industry is not limited to Muslims, but rather extols Islamic values that are universal and inclusive, helping to broaden our market reach and attract a wider customer base, regardless of religion."

The halal food market is expected to grow at a CAGR of 5.8% by 2020, with the demand for ethical treatment of animals alone resulting in a US$100 billion organic food market. Although the principle of treating animals humanely is embodied within the concept of halal food, educating Organisation of Islamic Cooperation (OIC) countries about the halal sector and its standards and accreditation continues to be a challenge.

The Muslim media and recreation sector has also seen an increase in demand, with new emerging media channels tailored for Muslims. An example of this is "Muslim Face", a new social media website initiative developed by Muslim entrepreneurs and aimed at bringing young Muslims together. This sector, expected to grow at a CAGR of 5.5% by 2020, is still facing the misperception that Islamic content is either religious or educational.

Contrary to the rest of the fashion industry, which is facing financial pressures as a result of global recession, the modest or Islamic fashion sector continues to expand. Islamic fashion accounts for about 11% of the global fashion industry today, and is expected to grow at a CAGR of 6% by 2020. Some of the key challenges facing the sector are the need to adopt a wider perspective when incorporating Islamic values throughout the modest fashion value chain, the lack of unified payment platforms, and variations in customs rules and regulations across countries.

In 2013, global Muslim spend in the pharmaceutical industry reached US$72 billion, and is expected to grow to US$103 billion by 2019. One of the major challenges facing the pharmaceuticals and personal care sector today is the lack of funding for research and development.

HE Majid Saif Al Ghurair, Chairman, Dubai Chamber, commented: "From clothing to food to pharmaceuticals, the demand is steadily growing and what is really needed at this point is information for the average Muslim consumer on what is available and where. This is where the State of the Global Islamic Economy Report will serve the discerning Islamic finance and halal lifestyle consumers."

Nadim Najjar, Managing Director of Thomson Reuters, Middle East and North Africa, said, "With impressive growth figures predicted over the next five years, diverse sectors within the halal lifestyle market are asserting themselves in the global economy, boosted by Muslim consumer buying power. This report will provide an invaluable tool for key stakeholders in navigating emerging trends in the industry."

The inaugural State Global Islamic Economy Report will be revealed before the Global Islamic Economy Summit (GIES). Held under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai, the Global Islamic Economy Summit this year will bring together thinkers and business leaders to address these issues.

Islamic finance assets to appreciate by 80% over the next five years

The value of assets in the Islamic finance sector is expected to increase by 80% over the next five years, reaching US$3.24 trillion in value by 2020, according to initial findings from the upcoming State of the Global Islamic Economy report. 

The report, which is commissioned and supported by the 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 2015 (GIES 2015) in Dubai this October.

Islamic finance is considered the most developed sector within the various pillars of the Islamic economy. The growth in the global shari'ah-compliant economy is broadly measured by the value of Islamic finance assets. In 2014, Islamic finance assets had an estimated value of US$1.8 trillion, with Islamic banking representing 74% of total shari'ah-compliant assets, followed by 16% 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 US$3.2 trillion by 2020, with Islamic banking constituting US$2.6 trillion of this figure.

There are now 1,143 Islamic financial institutions operating globally, including 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 the 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 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 shari'ah-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.

GIES 2015, which is taking place under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, will discuss Islamic finance as part of its remit. Featuring more than 60 international speakers across 15 sessions, the summit will offer comprehensive insights on the seven core pillars of the Islamic economy: Islamic finance, Halal Industry, Family tourism, Islamic Knowledge, Islamic Arts and design, Islamic Digital Economy, and Islamic standards.

One of the morning sessions at GIES 2015 will discuss the importance and relevance of the Islamic economy to Islamic finance, featuring a debate by Tirad Al Mahmoud, Jamal Bin Ghalaita and Dr Adnan Chilwan, the respective CEOs of the Islamic banks ADIB, Emirates Islamic and Dubai Islamic Bank. 

The CEO debate will be followed by a session covering how Islamic financial institutions have moved from niche to mainstream. The session will also 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.

Interested?

The GIES 2015 summit, organised by the Dubai Chamber of Commerce & Industry, the DIEDC and Thomson Reuters, gathers over 2,000 policymakers, thinkers and business leaders on 5 and 6 October 2015 at Madinat Jumeirah, Dubai, UAE. Register here

Read the Suroor Asia blog post on GIES 2015 

Read the Suroor Asia blog post on trends identified to date by the State of the Global Islamic Economy Report 2015-2016

Hashtag: #2015GIES

Takaful will grow at a CAGR of 19% through to 2019

Global Takaful Market - Market Research 2015-2019 by Technavio discusses life/family takaful and general takaful across the GCC, APAC, and ROW regions. The market is witnessing intense competition due to the low differentiation in the product offerings, the company said.

Technavio market research analysts estimate the global takaful market will grow at a CAGR of around 19% between 2015 and 2019. The GCC is the largest contributor of the takaful market occupying around 69% share, the company said, while Saudi Arabia, UAE and Malaysia are predicted to be the high growth markets. Changing regulation, growing affluence, and growth in organised savings are some key market drivers in the GCC. Specifically, increasing awareness among Muslims about the benefits of life insurance is encouraging the use of financial products that follow shari'ah principles. This in turn is providing opportunities for foreign vendors to collaborate with insurance companies providing takaful products and increase their market reach.  

The life/family takaful segment accounted for nearly 60% of the market share during 2014 and is expected to be worth US$20 billion by 2019. Life, medical and health, accident, and education plans comprise a significant portion of life/family takaful product segment. 

“The market has ample opportunities in most of the Muslim countries as they have Islamic banks that provide a financially viable and competitive alternative insurance to its policyholders. Islamic banking cannot be fully sharia'h-based unless there is takaful to take their insurance business. Consequently, these products are gaining acceptance in emerging markets such as Indonesia and Malaysia as the majority of their population are Muslims, who are more inclined to purchase shari'ah-compliant products,” says Navin Rajendra, IT Hardware and Services, Technavio Research. 

According to the research firm, the major vendors in the market are Kuwait Finance House, Dubai Islamic Bank, and Malayan Banking. Most of the takaful operators are concentrated in the Gulf region, however. 

Interested?

View the associated Slideshare

Get ready for more instant coffee varieties

The reputation of instant coffee has improved among consumers, especially youth, as it is less expensive and easy to prepare, boosting the outlook for instant coffee globally, says research firm Technavio. The company has published a new report on the global instant coffee market, which is expected to grow at a CAGR of over 5% from 2015 to 2019.

The number of coffee drinkers has increased, as has the acceptance of café culture globally, prompting coffee producers to introduce new varieties in the market, Technavio adds. Price fluctuations for green coffee beans add an element of volatility however.

“The growing trend of having coffee during casual social conversations, particularly in developing economies where the young population is high, is bolstering the market for coffee vendors globally,” says Faisal Ghaus, Vice President of Technavio.

“With the rise in coffee drinkers spurred by the increase in number of visitors to coffee shops and cafés, the potential customer base for instant coffee has expanded.”

Key vendors in this market include DE Master Blenders 1753, Keurig Green Mountain, Nestlé Holdings and Starbucks. 

Interested?

Find out more about the Technavio report

IFSB and INCEIF 7th Executive Forum to educate, further Islamic finance progress

The Islamic Financial Services Board (IFSB) and the INCEIF - The Global University of Islamic Finance are organising the seventh Executive Forum (EF) on Islamic Finance on 3 and 4 June 2015. The IFSB-INCEIF EF Series aim to provide a platform for global leaders in Islamic finance to discuss emerging issues facing the global Islamic financial services industry. 

The EF, to be held at Sasana Kijang, Kuala Lumpur, Malaysia, emphasises supervision and prudential regulation at national and international levels. Themed Building Momentum for Islamic Liquidity Management the EF will surface new insights through panel sessions, discussion groups, and practical case studies on the interactions between internal liquidity and external funds (e.g. profit-sharing investment accounts and sukuk).

The EF will also compare current conventional and Islamic overviews of liquidity risk management and discuss the challenges in building a resilient and robust liquidity risk management framework in the future. New developments in the regulatory landscape, with a special focus on the emerging liquidity risk management requirements, such as the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR), are on the agenda as well.

The current speaker list includes:

• Azahari Abdul Kudus, Chief Treasurer, KFH Malaysia 
• Daud Vicary Abdullah, President and CEO, INCEIF 
• Ijlal Alvi, Chief Executive Officer, International Islamic Financial Market 
• Abdullah Karatas, Manager, Investments, Islamic Development Bank 
• Professor Dr Merouane Lakehal-Ayat, Adjunct Professor, INCEIF 
• Prasanna Seshachellam, Director, Supervision, Dubai Financial Services Authority, UAE 

Next steps? 

Register

Email ifsb_sec@ifsb.org with questions

EY predicts maps the challenges for Islamic banking

Source: EY.

The Islamic banking industry has gone mainstream in several core markets. The combined profit of participation banks, or banks which adopt an interest-free model, crossed the US$10 billion mark in 2013 says EY. By 2019, the consultancy expects collective profits to touch US$37 billion as the industry continues its double-digit annual growth. 

According to EY, global Islamic banking assets attained compounded annual growth rate (CAGR) of around 17% from 2009 to 2013. Approximately 95% of international Islamic banking assets of commercial banks are based out of nine core markets, five of which are in the GCC (Saudi Arabia, UAE, Qatar, Kuwait and Bahrain). The market share of Islamic banking assets in Saudi Arabia, UAE, Qatar, Kuwait, Bahrain and Malaysia is now between 20% and 49%*. 

Islamic banks in Saudi Arabia, Kuwait and Bahrain represent more than 48.9%, 44.6% and 27.7% market share respectively.  Positive progress has been has made in Indonesia, Pakistan and Turkey, with 43.5%, 22% and 18.7% CAGR respectively from 2009 to 2013.

Gordon Bennie, MENA Financial Services Leader at EY, said:
“The six rapid-growth markets (RGMs) – Qatar, Indonesia, Saudi Arabia, Malaysia, UAE and Turkey (QISMUT) –commanded 80% of the international Islamic banking assets at US$625 billion in 2013. QISMUT Islamic banking assets are expected to continue to grow at a five-year CAGR of 19% to reach US$1.8 trillion by 2019.”

Source: EY.

The 2014-15 World Islamic Banking Competitiveness Report – Participation Banking 2.0 from EY explores how digital innovation is set to positively disrupt traditional banking models. Key findings for the report include:

• International Islamic banking assets with commercial banks are expected to exceed US$778 billion in 2014.
• The global profit pool of Islamic banks is set to triple by 2019.
• Islamic banking assets in the six core markets of Qatar, Indonesia, Saudi Arabia, Malaysia, UAE, Turkey (QISMUT) are on course to touch US$1.8 trillion by 2019.
• Islamic banks in Saudi Arabia, Kuwait and Bahrain represent more than 48.9%, 44.6% and 27.7% market share respectively.
• Positive progress has been has made in Indonesia, Turkey and Pakistan, with 43.5%, 18.7% and 22.0% CAGR respectively from 2009-2013.

The report states that the time is ripe to transition to "Participation Banking 2.0", or technology-based, service-driven value propositions. EY analysed the sentiments of over 2.2 million customers’ social media posts on their banking experiences with Islamic banks in Saudi Arabia, Bahrain, Kuwait, UAE, Malaysia, Indonesia, Turkey, Qatar and Oman. The results showed that customer satisfaction is mediocre for many Islamic banks, which shows how critical it will be for Islamic banks to invest in raising quality of service and understand digital banking. 

Ashar Nazim, Global Islamic Finance Leader at EY, observed during the launch of the report in late 2014 that the Islamic banking industry demands a fundamentally different approach to profitable growth. 

"Customers have mixed emotions about their experiences of dealing with Islamic banks. In the future, growth will be most significant for the banks that are able to strengthen customer experience through the use of digital technology. Banks that do not keep pace with technological advances are expected to face serious pushback from mainstream customers who will gravitate toward the larger conventional players who can deliver on digital,” he said.

In its research, EY found that:

• Four out of every 10 participation banks are not “listening”.
• Better retail banking experiences could attract a sizeable majority to switch banks.
• Customers do not just want their bank to have a digital presence. They want it be tailored to their lifestyle relationships and connections.
• Migration from physical to digital channels requires more attention. Half of the banks surveyed did not have a Twitter account and only one in 18 banks offered full customer engagement on social media.
• Banks should invest in analytics to build rich insights into customers’ delights and pain points and personalise user experiences.

Ashar added: “Customers are increasingly active online and vocal about their experiences. Going mainstream and building a customer base that is based on added value to the customer has not been easy for Islamic banks. Bridging the performance gap requires listening to customers. The transformation of customers’ banking experience across channels and all touch points is going to be crucial as digital and social banking and customer expectations continue to evolve. Understanding and analysing changing customer patterns can help anticipate needs, and encourage desired behaviours. Most importantly, user experience conversations have to be an ongoing activity and not a discrete project. Institutionalisation of these core capabilities requires boards and executives to efficiently shift their spending from running the bank to developing the bank.”

EY also noted that the returns on equity (ROEs) of Islamic banks remain approximately one-fifth lower than those of traditional banks in the same markets. This performance gap could cost its shareholders, and to some extent the investment account holders, up to US$17 billion in total forgone profit over the next five years. Structural transformation and scaling up are therefore becoming critical to improve shareholder returns.

The consultancy predicts that trade finance, mobile payment solutions and managing the cost of regulatory compliance will drive the next phase of profitability. Most Islamic banks remain underweight when it comes to their role in trade finance business.

Ashar said: “The key driving markets for Islamic banking will continue to be Saudi Arabia and Malaysia, with Turkey and Indonesia also establishing themselves as large Islamic banking centers. With increasing market size and greater propensity for the adoption of technology-based, customer-centric solutions, the industry can be expected to further reduce its profitability gap with respect to conventional benchmarks. The challenges of going mainstream will be eliminating operational silos and leveraging customer insights to improve risk management, pricing and channel performance.”

Interested?

View the complete infographics.

*The research and insights are primarily based on the EY Participation Banking Universe (EY Universe), which is proprietary, based on samples  and is not meant to be fully exhaustive. The EY Universe analysis covers 114 banks across participation banking markets. Insights are also based on interviews with banking executives and industry observers, to identify key trends, risks and priorities. The analysis excludes Iran. 

CrescentRating launches travel aggregator for Muslim travel

CrescentRating has launched Muslim Travel Warehouse – a global B2B platform and travel aggregator offering Muslim-friendly tour packages.

In addition to search and booking capabilities on an extensive portfolio of packages, Muslim Travel Warehouse offers travel agents around the world a way to provide Muslim travellers with custom itineraries. All products available on the platform will be rated by CrescentRating's independent rating standard based on how well they cater to Muslim travellers.

The new platform will initially offer tour packages to 15 destinations, with more packages and destinations being added over the next 12 months. Muslim Travel Warehouse plans to work with destination management companies, tourism boards and ground operators from around the world to expand its portfolio.

Muslim Travel Warehouse will also provide a wide range of support services for its partners including a live travel trade helpdesk via the live chat service, detailed halal tourism information including fact sheets and digital brochures. For more information on Muslim Travel Warehouse please visit its website at:

"At CrescentRating we have been passionately exploring all opportunities not just to grow this segment, but incorporate all available technologies while doing so. It was a year or so ago when we realised that there was really a gap in the market for a global B2B platform for tour packages customised for the Muslim travel market. The enquiries we were getting through both our existing platforms CrescentRating and HalalTrip, encouraged us to start looking for a solution. That journey has now led us to launch the Muslim Travel Warehouse," explained Fazal Bahardeen, CEO, CrescentRating on the Muslim Travel Warehouse blog in late April.

"According to the latest figures we released in the MasterCard-CrescentRating Global Muslim Travel Index (GMTI) 2015, the halal tourism sector was worth US$145 billion in 2014. This figure is predicted to grow to US$200 billion by 2020. Given that family travel contributes 52% of the entire total of the halal tourism sector, providing travel agencies with a full portfolio of Muslim friendly tour packages, excursions and activities will definitely help accelerate the growth of this sector."

Spoilt for choice with fashion brands for modesty

Source: SHUKR website.

SHUKR Islamic Clothing has released a video about how their clothing is made, titled Behind the Seams. All of its clothing is designed and made in-house, with one employee making a garment from start to finish.

According to the company, SHUKR’s design process starts in the mind of Creative Director Tabassum Siddiqui, who designs all the looks on the website. "She sketches looks based on inspiration she draws from Islamic architecture, travel, and the natural world around her. Once the sketches are completed, the designs are turned into flat-lays and technical drawings for our pattern-makers," the company said in a statement.

SHUKR is one of many brands which offer modest clothing online. These brands typically offer women's clothing, but some will also cater for men and children too. Designs vary widely, as does quality and pricing, but in general the clothing is loose-fitting and covers the elbows.

Following is a selection of brands offering modest fashion*, all of which ship worldwide:

Al Moultazimoun Boutique has both ready-to-wear and custom clothing for women, men and children. It also lists scents, decor items, accessories, educational resources and electronics.

Artizara was founded in 2002 to meet the Islamic and modest clothing needs of women with style. Besides clothing for men, women and children, it also sells jewellery, gifts and art.

Black Orchids is a ladies-only online boutique with accessories, casuals, work wear and maternity wear. It offers a collection of pure Egyptian silver jewellery.

Citra Style is an online store for women which also offers long cardigans and pants. "Citra" stands for protection, cover, shelter and modesty in Arabic.

East Essence was set up in 2007 in California, in the US, to provide quality clothing at unbeatable prices. It features clothing for men, women and children, accessories, items for prayer and uniforms.

HijUp presents a range of different brands for ladies, including sports wear and maternity clothes. It also has selections for children and for the home.

Inayah is UK-based and targeted at ladies with fashion, accessories and gifts sections. 

Islamic Boutique is based in Egypt and targeted at ladies, with a wide range of items including cotton collars for garments with low necklines. 

Islamic Design House provides fashion options for women and men.

Louella was founded in California by US fencer and sports ambassador Ibtihaj Muhammad. 

Modanisa is a store for hijab style fashion, including for plus size requirements. It ships worldwide.

My Batua has a 40-year heritage in fashion, making of handbags and other accessories. The online store sells fashions for men and women, handbags, footwear and various accessories.

For something a little different, Just Muslim offers mostly mens' casual wear.

SHUKR, of course, also ships worldwide, and offers men's and women's clothing as well as accessories.

If you have a fashion brand and would like to be featured please do get in touch.

*Quality, delivery times and shipping charges will vary. A merchant may not ship to your country; check the supported destinations. Please check online for feedback on each merchant before deciding to buy.

Scholar calls for global shari'ah compliant dispute resolution mechanism

Islamic finance scholar Professor Dr Akram Laldin from Malaysia has said there is a need for a global shari'ah compliant dispute resolution mechanism at the eighth Shari'a Scholar session hosted by The Waqf Fund, a Bahrain-based special fund to support Islamic finance training, education and research.

Dr Laldin is a board member on Bank Negara Malaysia's Shari'a Advisory Council, AAOIFI and a number of Islamic financial institutions in Malaysia and globally.

Dr Laldin also stressed that shari'ah scholars hold heavy responsibility and should be proactive in developing themselves through continuous training, not just in shari'ah but also in relevant areas such as economics, finance, banking, accounting, and law in order to be able to give a religious verdict after full knowledge and understanding of the matter.

According to Dr Laldin, several key challenges are seen in shari'ah compliance, suggesting the need for a global dispute resolution body, which does not exist at this time:

• Conventional mindset of key decision-makers and a lack of conviction and belief in what they are doing
• Not following the right process
• Copying conventional products without due consideration to shari'ah
• Implementation challenges in the absence of understanding of shari'ah
• Lack of understanding of shari'ah by the auditors
• Advertising and promotion not in line with shari'ah
• Restructuring products or transactions without ensuring shari'ah compliance

Global sukuk market to surpass US$100 billion in 2015

The Global Sukuk Market: 2015 Outlook, published in December 2014 by KFH Research, notes that the sukuk market is expected to continue to record issuances of more than US$100 billion in 2015, against an average of US$112 billion from 2011 to 2013, as acceptance continues to expand to more countries and sectors. 

Meanwhile, the value of outstanding sukuk is expected to grow at the average pace of the past five years, or around 16% per annum, to US$350 to 360 billion in 2015. In the first 11 months of 2014 (11M14), outstanding sukuk amounted to US$300 billion.

Overall, the global sukuk market recorded a solid performance in 11M14, supported by a recovering global economy, as well as benchmark-sized issuances from sovereign entities and Basel III sukuks by international finance institutions (IFIs). 

A few key trends emerged in 2014, particularly with regards to cross-border activity in the sukuk market: 

• Growing issuances in foreign currency sukuk, especially in US dollars 
• Malaysia solidifies its position as multi-currency sukuk issuance platform
• Cross-border listing of sukuk, and 
• Sukuk to enhance compliance with Basel III.

TechNavio says global halal cosmetics market to surpass a CAGR of 13% through to 2019

Source: Amara Cosmetics
website.

TechNavio, a tech-focused research firm, has published a new report titled the Global Halal Cosmetics Market, which it says is expected to grow at a CAGR of 13.67% from 2014 to 2019.

TechNavio says that the global halal cosmetics market is witnessing a higher demand for safe, good quality cosmetics. As halal certification is a mark of purity, the demand for these cosmetics is expected to grow rapidly as awareness increases about the products.

“Many halal brands are gaining international recognition as safe and hygienic cosmetics, which is boosting the demand for halal cosmetics,” says Faisal Ghaus, Vice President of TechNavio.

The latest report by TechNavio emphasizes the growing demand from non-Muslim countries for halal cosmetics, which will open huge growth opportunities for market vendors. Currently, these products are widely accepted by different communities, as these are considered to be safe, high quality and prepared using hygienic procedures.

“Many global personal care companies entering this market are manufacturing and distributing halal beauty products worldwide, as they are considered similar to vegan and organic products,” says Ghaus.

Key vendors mentioned in the report include Amara Cosmetics (accepts international orders), MMA Bio Lab (IMED Lab), INIKA Cosmetics and the Martha Tilaar Group.

Food traceability becomes increasingly important

A new report from research firm TechNavio, forecasts that the global food traceability market is expected to grow at a CAGR of 9.88% from 2015 to 2019.

According to the report from TechNavio, the emergence of analytics systems in this market will help organisations make informed decisions based on real-time data. These systems can also facilitate the tracking of food products in all phases of production, processing, packaging and distribution.

“Big players like IBM have come up with systems that help food distributors, retailers and health officials predict which food products are most likely to be contaminated, and speed up the investigation of an outbreak of any food-borne disease,” says Faisal Ghaus, Vice President of TechNavio.

The market is also expected to witness the strongest growth from the APAC region. The increasing demand for food products, dairy products and packaged food in this region will help the market flourish in the coming years.

“The growth of SMEs in emerging regions will also increase the adoption of food traceability systems, thus positively impacting the CAGR of this market,” says Ghaus.

Key vendors mentioned in the report include Intermec, DuPont, Honeywell and IBM.

2015 looks bright all round for Islamic banking and finance

The Islamic banking and finance market exceeded US$2 trillion in assets globally, strengthening in traditional markets such as Malaysia, Pakistan and the Middle East, and expanding into other destinations for the first time, including in Korea, Australia, and China, says the AlHuda Centre of Islamic Banking and Economics (CIBE), an advisor and consultancy for Islamic finance. 

According to the organisation, countries which recently entered into Islamic banking and finance have also shown good progress, including Azerbaijan, Kazakhstan, and Oman. 

Muhammad Zubair Mughal, Chief Executive Officer, AlHuda CIBE, predicts that the market could exceed US$2.5 trillion dollars in 2015, estimating that Islamic banking will account for 86% share, with sukuk (6%), Islamic funds (4%), takaful (2%), and Islamic microfinance (1%) rounding out the remainder of the pie. 

He added that there are more than 1,500 organisations offering Islamic financial services in more than 90 countries worldwide, and that non-Muslim countries take up 40% of this share. On the other hand, Muslim countries including Qatar, Saudi Arabia, UAE, Malaysia, Pakistan, Indonesia dominate in global Islamic banking, contributing 76% of the market. 

Muhammad Zubair Mughal forecast rapid growth of the sukuk market in 2015, and said it could be worth as much as US$150 billion. The Islamic fund market could be valued at US$100 billion. Takaful will contribute a more modest US$20 billion in 2015, a 15% growth rate, with India named as one of its new destinations. Islamic microfinance will also see a positive year, the CEO said. 

Global Islamic fund sector worth US$72.9 billion in Q314

The global Islamic fund sector has gathered US$72.9 billion in assets under management (AuM) as of 17 September 2014, according to KFH Research's Islamic Funds Review Q3-2014. 

As of September, there are 1,149 Islamic funds, the research firm said, predicting that the outlook for the last quarter of 2014 of the Islamic fund sector is broadly positive, with Islamic banking and capital market trends expected to reinforce the advancement of the shari’ah compliant funds sector. 

"We forecast global Islamic AuM to fall between US$87.9 billion and US$97.3 billion by end-2017," the company noted online.

More about the review is available here.

*Image from the KFH Research website.

Positive outlook for global sukuk industry

The global sukuk industry is expected to be one of the fastest growing segments of the Islamic finance industry with huge growth potential in the Gulf Cooperation Council (GCC) region, a report by the Dubai Chamber of Commerce and Industry has stated.
The report further noted that Dubai is a key centre for sukuk, which are expected to play an important role over the next decade in securing funds for the substantial line-up of new projects. The observations in the report, based on UK Islamic Finance Secretariat (UKIFS) and Malaysia International Islamic Financial Centre (MIFC) data, are important against the backdrop of the 10th World Islamic Economy Forum which will be organised in Dubai from 28-30 October 2014 by Dubai Chamber and the WIEF Foundation.

“Islamic economy has become increasingly relevant in the modern world, offering new hopes of revival for the fragile global economy. The 10th World Islamic Economy Forum in Dubai will put the spotlight on the massive opportunities available in various segments of this growing sector,” said H.E. Abdul Rahman Saif Al Ghurair, Chairman of Dubai Chamber.

“The Dubai Chamber research note highlights the sukuk market is one of the most attractive areas of Islamic finance that has attracted considerable interest from the business community worldwide. In addition, the sukuk market has remarkable growth avenues that can be effectively tapped to support the growing investment requirements in various sectors.” 

While the GCC and Malaysia have emerged as the main hubs for issuing sukuk, the main issuers of the sukuk in the global market are sovereigns, followed by corporates and government-related enterprises. Countries such as Tunisia, Mauritania, Senegal and Oman are set to be key markets for sukuk, Dubai Chamber observes in the research note.

However, sukuk issuance is not limited to Islamic countries. In 2014, a number of high profile debut sovereign issues are expected to take place in countries such as the UK, Ireland, and South Africa. It is further anticipated that sovereign issues by the UK are likely to spur interest in Europe for sovereign sukuk as they provide access to the growing Islamic liquidity pool, the report says.

According to PricewaterhouseCoopers (PwC), over US$16 billion of sukuk are expected to be issued by 2014 with Dubai already emerging as a centre for this asset class. The UK, which announced its maiden sovereign sukuk issue at the 9th WIEF in London last year, has already completed the issue earlier this year. With so much activity in the sukuk market, development and implementation of laws and regulations for the issuance of sukuk has been introduced by a number of countries, PwC observes.

Currently, compared to the conventional bond market, the sukuk market is still relatively small. According to the Dubai Chamber research note, global financial assets are dominated by Islamic banking assets, which accounted for about 80% of the total assets in 2013 while sukuk made up just 15% of the market. However, the good news is that sukuk bond issuance has significantly grown over the last decade. 

The Dubai Chamber report, citing data from Rasameel Structural Finance, shows that the issue of sukuk bonds has registered cumulative annual growth rate of about 47% from 2001 to 2013.

The upward positive momentum is more pronounced from 2010 when the global sukuk market, having overcome the initial shock of the financial crisis, witnessed a very successful run. In 2012 it crossed the US$100 billion mark with issues valued at about US$137 billion, and in 2013, it surpassed US$100 billion for the second consecutive year, despite slowing down 12% compared to 2012 with issues worth US$119.7 billion, the Dubai Chamber research note says.

The slowdown, which was evident during the first three quarters of 2013, has been mainly attributed to the Federal Reserve (Fed) announcement in May 2013 to cut-back on the US monthly stimulus programme. The report observes that the announcement by the Fed had a profound effect on the global bond market which saw prices of fixed-income instruments, including sukuk, falling sharply as fears spread that the reduced bond purchases by the Fed would push investors to higher yielding assets on an improving US economy. Now with the Fed’s aggressive bond-buying programme tapering since January 2014, sukuk issuance may again be impacted in 2014, the report states.

The report further notes that despite the huge potential for growth and the increased diversity of sukuk products, the market not only requires more instruments but existing ones need to be refined as some sukuk structures are yet to gain wider acceptance. The market is also struggling with legal uncertainty over regulatory disparity in different countries, Dubai Chamber observes in the report.

In an August report from Kuwait Finance House, global primary sukuk market issuances amounted to US$7.95 billion in July, a 31.4% decline month-on-month compared to the US$11.6 billion volume in June. The subdued volume was attributed to Ramadhan, which occurred from late June to late July. 

Corporate issuers throughout the global markets remained absent from the primary market with the exception of few corporate sukuk issued in Malaysia and a sole corporate sukuk issued in Indonesia. Collectively, these corporate sukuk produced a volume of US$1.16 billion, or less than 15% of the new issuances market share in July as compared to the US$5.24 billion volume or 45.3% market share in June.

Notably, the two global Islamic finance mandated multilateral entities, the Islamic Development Bank (IDB) and the International Islamic Liquidity Management Corporation (IILM) tapped the market in July, raising US$1.86 billion. The IDB issued a US$1 billion tranche on 17 July in a-privately placed transaction. This issue marks IDB’s third issuance this year following the US$1.5 billion publicly-listed tranche in March and a privately-placed US$100 million tranche in April. 

Meanwhile, the IILM issued its third US$860 million tranche, as a re-issuance for the second tranche of the same volume issued earlier in April this year and that matured on 23 July. This latest issuance marks IILM’s seventh issuance to date since its inaugural issuance in August last year. The reissuance maintains IILM’s total short term sukuk outstanding portfolio at US$1.35 billion.

KFH said the global primary market volume has reached US$74.15 billion in the seven months of the year ending July 2014 (7M14), 6.8% higher than the US$69.42 billion volume in 7M13. Despite a decline in corporate issuances in July, sovereign and quasi-sovereign issuers have steered the market to ensure 2014’s annual issuances to date remain on track to overcome last year’s annual issue volume of US$119.7 billion.

The primary market activity was heavily concentrated in Malaysia which accounted for 80.6% or US$6.41 billion of the total new issuances in July (June 2014: US$6.1 billion or 52.8%). The Malaysian market was spearheaded by Bank Negara Malaysia, which issued over US$3.4 billion worth of short-term maturity sukuk. Approximately USD$931 million was also raised by two Malaysian government-related entities, Dana Infra Nasional (US$787.6 million) and Cagamas (US$144.5 million). In the Malaysian corporate sukuk sector, five issuers tapped the market in July collectively raising US$1.14 billion in proceeds.

Other than Malaysia, the primary sukuk market activity across global markets remained subdued. Obligors based in five other jurisdictions tapped the market, namely Saudi Arabia, Senegal, Indonesia, Bahrain and Gambia. The sole Saudi-originated sukuk issuance was by the Jeddah-based Islamic Development Bank which issued a US$1 billion tranche, accounting for 12.6% of the total monthly issuances volume. 

In Indonesia, sukuk worth US$188.12 million were issued in July, accounting for 2.37% share of the market. Notably, the Indonesian primary market witnessed the issuance of the jurisdiction’s first corporate sukuk of 2014, worth US$25.11 million by Bank International Indonesia. In 7M14, the Indonesian primary market has been entirely dominated by sovereign issuances by the country’s Ministry of Finance. Bahrain accounted for US$149.26 million, or 1.9% market share.

All issuers in July issued sukuk denominated in the respective local currencies of their domiciles. The only two exceptions were the multilaterals, the Saudi-based IDB and the Malaysia-based IILM, which issued in US dollars. Based on this, the Malaysian ringgit accounted for bulk of the issuances, representing 69.8% of the total market (June 2014: 54.9%). The US dollar was the second major currency accounting for 23.4% of the total market share, spearheaded by the IDB and IILM sukuk tranches worth a combined US$1.86 billion. The West Africa CFA franc (XOF) was a new entry in the global sukuk market following Senegal’s debut and accounted for 2.5% of the market. The market shares of the remaining currencies were as follows: Indonesian rupiah 2.37%; Bahraini dinar 1.9% and Gambian dalasi 0.01%.

By structure of issuances, the market share of murabahah sukuk increased a notch to 63.3% in July (June 2014: 50.6%) while that of ijarah declined to 6.5% (June 2014: 13.8%). None of the sukuk issued in July were structured as hybrids/combination, whereas these accounted for 18% of the total in June. The change is mainly on account of an absence of GCC-based sukuk issuers in July as the ijarah and hybrid sukuk structures are popular in the GCC. In contrast, murabahah is the most popular sukuk structure among Malaysian issuers that accounted for bulk of the sukuk issuances in July. The share of wakalah or wakalah bil istithmar sukuk surged to 23.4% in July (June 2014: 10.1%) spearheaded by the large tranches issued by the IDB and IILM respectively.

By sector, government issuances accounted for 50.3% or almost US$4 billion of total issuances in July (June 2014: 47% or US$5.44 billion), followed by the financial services sector with a 25.7% or US$2.04 billion share (June 2014: 31.2% or US$3.62 billion). Power and utilities was the other major sector in July accounting for 13.7% or US$1.09 billion of the issuances volume while the real estate and construction sector accounted for the remaining 10.3% or US$820 million of the volume issued in July.

Overall, a total of 78 sukuk tranches were issued in July, an increased number compared to the previous months (June 2014: 65; May: 62; April: 68). This increase is mainly due to the greater amount of issuances by Malaysian issuers that generally issue several smaller-sized tranches under one sukuk programme. For example, 33 corporate sukuk tranches were issued by five Malaysian corporate entities in July, and were worth a combined US$1.14 billion. Comparatively the GCC issuers have traditionally issued single but larger value tranches.

Among the sukuks issued in July, 34 tranches were issued by the corporate sector totalling US$1.16 billion which compares with the 32 sukuks issued in June, worth a much higher US$5.24 billion. The value of corporate sukuk in June had been substantially uplifted by huge tranches issued in Saudi Arabia, the UAE and Turkey where corporate issuers had timed the market ahead of the month of Ramadhan. 

Meanwhile, sovereign issuers issued 32 sukuk (including short-term central bank sukuk) worth US$5.86 billion in July, a slight increase compared to the 29 sukuk worth US$5.44 billion issued in June. Similarly, 12 government-related entity sukuk were issued in Malaysia in July, worth US$931.1 million, against the four sukuk worth US$902 million issued the month before.

Moving forward, KFH notes that a strong pipeline remains in place for the rest of 2014. Particularly in the sovereign sukuk sector, debut pipeline issuances in 3Q14 include Hong Kong, the Emirate of Sharjah and also potentially Oman. The horizons of the sukuk market continue expanding as more and more jurisdictions tap the market with an increased number of business sectors issuing sukuk. 

To date, KFH predicts that at least 29 jurisdictions have tapped the sukuk market (excluding offshore domiciles) and more are expected to follow suit, particularly in Africa. Overall, based on 2014’s performance so far, the outlook for the global sukuk market remains promising and it is expected that 2014 may turn out to be another record breaking year compared to 2012’s annual issuances volume of US$131.2 billion.

Bright outlook for global halal food and beverage market

The halal food and beverage market, which includes raw meats such as chicken and beef as well as processed foods and beverages, was worth US$1.1 trillion industry in 2013, states a research note by the Dubai Chamber of Commerce and Industry based on a recent study by Thomson Reuters in collaboration with the Dinar Standard. 

The report estimates that in 2012, the halal food and beverage market accounted for 16.6% of the global food and beverage market. By 2018, the market is expected to be worth US$1.6 trillion, a CAGR of about 6.9%.

The Dubai Chamber report was released on 10 August against the backdrop of the 10th World Islamic Economic Forum (WIEF), to be held in Dubai from 28-30 October 2014. One of the discussion points at the event will be halal food as a major component of the Islamic economy.

H.E. Abdul Rahman Saif Al Ghurair, Chairman of Dubai Chamber, said: “We see opportunities to enhance the halal food industry. The research finding on halal food sector is of considerable importance for the UAE food and beverage business, especially since halal food is a key pillar in the Dubai Capital of Islamic Economy initiative launched in 2013. Based on the initiative, Dubai has the capability to create new avenues for growth in this sector, and become an international centre for the halal industry.”

According to the Dubai Chamber report, the UAE halal food consumption market was valued at around US$20 billion in 2012. Halal meat is an important component of this market, dominated by unpackaged meat which, according to 2013 estimates, accounted for 78.7% of the market.

Most of the meat sold in the UAE is uncooked, with retail sales accounting for 43.8% of the UAE raw meat market in 2013 while the food service business, including hotels, restaurants and catering outlets, constituted 47.9%.

Highlighting the preference of UAE residents for packaged food as they look for convenience in their busy lifestyle, the research note shows that packaged food worth about AED11,148 million was sold in the UAE in 2013. Increasing demand is expected to take the packaged food market to AED14,078 million by 2018, with sales value growing at a CAGR of 4.78% during this period, indicating a long-term business opportunity for halal food in the UAE. The report identifies branding and franchising in this area as critical to UAE businesses looking to increase profit margins, and new opportunities for international expansion.

Globally, the halal food industry is growing in a number of markets mainly in countries in the Middle East and North Africa (MENA) region, South and Southeast Asia. Indonesia is the biggest halal food market with a market value of US$197 billion in 2012, according to the report. Turkey, with US$100 billion, is the second largest market.

The report highlights the potential for UAE businesses to source lower cost basic food products from a variety of countries across Africa, Asia and Latin America, which can then be further processed, packed and branded to be sold in international markets. 

Dubai imports its meat from different sources. Based on Dubai Customs data, Brazil accounted for more than half of Dubai’s meat imports in 2013, supplying 166 thousand metric tons (TMT) of the total volume of 314 TMT to take 53% of market share, far ahead of the US at second place with 14%, the Dubai Chamber stated. The US exported 43 TMT while Australia was a distant third with 27 TMT, taking just 9% market share. Among the neighbouring countries, Pakistan and India each supplied 5% of the total volume, while Ethiopia cornered 3%.

Business opportunities in global halal food market are not limited to food production, but span the entire halal food value chain. This value chain includes businesses providing inputs such as seeds and fertilisers, farms raising livestock, businesses providing technology for food production, food processing facilities, logistics companies moving perishable food items, importers of food and finally retail outlets selling halal food products, the Dubai Chamber states in the report. Innovation across this value chain could therefore be a driver helping in the search for new markets and greater profits, it adds.

With economic indicators pointing to accelerating growth of the economy of Dubai and the UAE in the coming years, growing manpower requirements will lead to an increase in population, which in turn will raise imports of food, particularly meat which constitutes a major component of the population’s diet, the report states.

Global takaful market has a 16% CAGR through to 2018

Research and Markets has forecast the global takaful market will grow at a CAGR of 16% from 2013 to 2018 on the back of growing market opportunities and new technical expertise. However, low awareness levels could pose a challenge.

The key vendors dominating this space are Dubai Islamic Bank, Kuwait Finance House, and Malayan Banking. Other vendors mentioned in the report, the Global Takaful Market 2014-2018, include Bank Mandiri, HSBC Amanah Takaful Malaysia, and Asuransi Jiwa Bringin Jiwa Sejahtera.

An analyst from the team said: "Geographically, there are not many large takaful operators operating internationally. In fact, there is a growing opportunity for takaful operators to start operations in full swing in geographies such as Europe, the Americas, and Russia. Governments in these geographies are highly recommending the uptake of takaful. Partnerships with banks will present a new and readily available distribution channel, which could open up a gamut of new opportunities for takaful operators to develop shari'ah-compliant bancassurance products."

According to the report, the rapid economic growth in emerging countries is a major driver as higher per capita disposable income has resulted in money available for purchasing takaful products. Countries such as Indonesia, Turkey, and Malaysia have a large Muslim population who are inclined to purchase products that comply with shari'ah principles while non-Muslims are showing an interest as well.