Tenth World Islamic Economic Forum (WIEF) Knowledge Partner PricewaterhouseCoopers (PwC) has shared an outline of the global Islamic finance environment in conjunction with the 10th WIEF, to be held in Dubai in October this year.
On the global front, Islamic finance is expected to register double-digit growth this year and cross the US$2.7 trillion mark by 2017. According to PwC, Islamic finance has grown both in size and geographic coverage around the world. The industry continues to see the establishment of Islamic financial institutions in new jurisdictions. There has been product innovation across all Islamic finance asset classes as the industry diversifies beyond its traditional banking products and services. Islamic banking continues to be the main driver for Islamic finance and is likely to account for more than 75% of global Islamic finance assets while sukuk currently account for nearly 15% of the market, PwC said.
Asia and Africa are expected to contribute significantly towards the growth in Islamic finance with approximately 95% of the global Muslim population located in these regions. Southeast Asia and the Middle East remain centres of Islamic finance activity. The Gulf Cooperation Council (GCC) accounts for approximately one-third of global Islamic finance and assets have grown over five years at more than 20% CAGR, says PwC.
Globally, institutions and governments are increasingly resorting to Islamic financing in order to meet their funding requirements. Governments of the UK, South Africa and the Philippines have announced sovereign sukuk issues, led by the UK which announced its maiden sovereign sukuk issue at WIEF 9 in London last year and completed the issue earlier this year to an enthusiastic response.
As a result, development and implementation of laws and regulations for the issuance of sukuk has been introduced by a number of countries. Dubai recently issued a decree to set up the Dubai Islamic Economy Development Centre as part of a wider plan to become a global hub for Islamic finance which, in the UAE, is expected to grow at a five-year CAGR of 17% from 2013 to 2018 from a base of approximately US$95 billion in 2013. Over US$16 billion of sukuk are expected to be issued by 2014 and Dubai has already emerged as a centre for this asset class.
More than 2,500 participants from 140 countries expected at the WIEF this year. The event includes a panel on Islamic finance, with Toby O'Connor, Chief Executive Officer, The Islamic Bank of Asia, Dr Adnan Chilwan, Chief Executive Officer, Dubai Islamic Bank, Tirad Mahmoud, Chief Executive Officer, Abu Dhabi Islamic Bank, and Muzaffar Hisham, CEO, Maybank Islamic, Malaysia as panelists and Samad Sirohey, CEO, Citi Islamic, UAE as the moderator.