Mass conversion: Faith in Islamic finance booming in non-Muslim economies

Published August 12th, 2014 - 02:08 GMT
A clutch of new non-Muslim countries - Australia, Hong Kong, Philippines and Sri Lanka - join the UK as Islamic finance gains visibility and recognition outside the Muslim world.
A clutch of new non-Muslim countries - Australia, Hong Kong, Philippines and Sri Lanka - join the UK as Islamic finance gains visibility and recognition outside the Muslim world.

For the second consecutive year, the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IDB), presents findings from the Islamic Finance Development Indicator, developed in collaboration with Thomson Reuters.

The ICD-Thomson Reuters Islamic Finance Development Indicator (IFDI) is the only numerical measure representing the overall health and development of the Islamic finance industry worldwide.  It considers the development of the Islamic finance industry beyond mere asset growth. The IFDI measures five key components that combine to depict the bigger picture of the state of Islamic finance in 92 countries: quantitative development, governance, social responsibility, knowledge and awareness.  The IFDI was first released at the Global Islamic Economy Summit (GIES) in November 2013 and will be updated annually.

Today, ICD and Thomson Reuters released findings for the Awareness Indicator which measures Islamic finance market awareness in 2013 by assessing three components: conferences, seminars and news for 92 countries.

On the launch of the Awareness Indicator, Khaled Al Aboodi, CEO, ICD said: “As a multilateral development institution, we have seen increasing interest from across our member countries for enabling Islamic finance architecture. The first step towards developing this architecture is enhancing the awareness of market participants and we are heartened with the sustained increase in news, seminars and conferences for Islamic finance. What is needed now for most of these emerging Islamic finance markets is to translate interest into action through the development of a holistic Islamic financial services framework that leads to a more inclusive financial system open for foreign direct investment.”  

The rise in conferences and seminars points to a much higher number of delegates and participants reached worldwide. The number of Islamic finance conferences (>100 participants) worldwide surged by 41 per cent to 107 in 2013 from 76 in 2012, with 36 countries hosting conferences compared to 25 in 2012. Seminars (<100 participants) also increased by 17 per cent to reach 124 in 2013 from 106 in 2012, with 35 countries hosting seminars compared to 30 in 2012. The much higher growth in the number of conferences versus seminars - 41 per cent versus 17 per cent - points to a bigger demand for industry interaction and engagement in 2013.

Malaysia, UAE, UK attract most conferences, intensifies battle to be world’s Islamic finance hub. In all, Malaysia played host to 22 per cent of all conferences in 2013. The UAE comes in second with 11 followed by the UK (eight) and Bahrain (six). The top three align with the contenders – Kuala Lumpur, Dubai and London - to be the world’s Islamic finance hub. Malaysia also leads on the number of seminars (28), followed by UK (19) and Oman (10). Morocco and Tajikistan were noteworthy newcomers with four and three conferences respectively. Oman is taking serious steps to develop its Islamic finance industry by spreading awareness across the country through events such as seminars and conferences, and improved its ranking in the Top 10 for both.

A clutch of new non-Muslim countries - Australia, Hong Kong, Philippines and Sri Lanka - join the UK as Islamic finance gains visibility and recognition outside the Muslim world. The UK’s rise up the seminars sub-indicator is mostly driven by its government’s ambition to become an Islamic finance hub, while Singapore, another top global financial centre, joins the UK as the only other non-Muslim-majority country in the Conferences Top 10 striving to increase its Islamic finance footprint.

Islamic finance in the UAE is most newsworthy, with Malaysia and rest of the GCC also make headlines, and big events such as WIEF and GIES continue to be news magnets. Most of 2012’s top 10 countries retained their dominance in 2013, with the top four ranked countries - UAE, Malaysia, Saudi Arabia and Bahrain - remaining unchanged. In absolute numbers, Islamic finance news for 92 countries reached 14,500 in 2013. UAE is top for news focus, attracting almost 3,700 news reports. Malaysia trails with 3,300. The top two sweep almost 40 per cent of global news. UAE leads primarily because of the year-long sustained media attention on Dubai’s plans to become the world’s capital of the Islamic economy; the announcement was made in January 2013 and news climax was reached in November at the GIES, which was also the highest point for Islamic finance news for the whole year. In Malaysia local press played an important role in reporting the country’s developments, including big national news such as the introduction of the Islamic Financial Services Act 2013 which came into effect in July.

There is a wide gap between the top two leaders and third-placed Saudi Arabia which only attracted a little over 2,000 news pieces related to Islamic finance. For the other GCC countries exclusive country-level news as well as regional news lifted their rankings. Oman especially had an active year as several Islamic windows and banks started operations. This was followed by the conversion of a conventional insurance company to a Takaful company, and the Sultanate’s first-ever Sukuk issuance in November.

UK topped European coverage. The country attracted a deluge of media focus when, as host for the World Islamic Economic Forum (WIEF) in London in October, the British Prime Minister announced the government’s plans to issue the West’s first sovereign Sukuk.


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