What is the Islamic Economy?

~ and why Dubai?

Sayd Farook, Global Head Islamic Capital Markets, Thomson ReutersAbdalhamid Evans, Editorial Director, Global Islamic Economy Summit

• The Islamic Economy is emerging as a new economic paradigm that will be driving economic growth over the coming decade.

• Bringing together diverse elements across various industry sectors, spanning geographic regions and crossing cultural boundaries, this inaugural Summit will be the defining event of the Global Islamic Economy.

• The Global Islamic Economy Summit is organized by Thomson Reuters and Dubai Chamber of Commerce & Industry, held under the patronage of HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, on November 25-26th 2013 at Madinat Jumeirah, Dubai, UAE.

• The Global Islamic Economy Summit will create the context in which the various Islamic Finance sectors and Halal Food, Travel, Lifestyle, SME Development and Infrastructure converge, creating a new landscape of economic opportunity.

Islamic Economy

Six pillars of the Islamic Economy

Islamic Finance & Insurance• Islamic banking• Islamic asset management• Takaful• Retakaful• Sukuk and capital markets• Waqf endowments

Halal Food• Agriculture, ingredients and manufacturing• Retail• Logistics• Research and product development• Food services

Halal Lifestyle• Cosmetics• Personal care• Pharmaceuticals• Fashion• Entertainment• Art and design• media / news media

Halal Travel• Hospitality• Tourism• Meetings, incentives, conferences and events

(MICE)• Healthcare• Hajj / Umrah

SME Development• Technology and innovation• Venture capital financing• Incubation• Training

Islamic Economy Infrastructure• Training and education• Compliance• Standardization• Research• Muslim consumer marketing and research• Government services

Islamic economic sectors are diverse, each with its own challenges and unique opportunities

Islamic Finance & Insurance

Key Features of the Islamic Finance and Insurance Sector

72% of Muslims are non-banked Sukuk market is expected to grow by 10% or more

Global Islamic banking assets of $1.3trillion in 2011, expected to reach $2 trillion by 2014

Average annual growth of 19% over the last four years

Growing 50% faster than overall banking sector in several core markets

Over 50% of the growth will come from emerging Islamic finance markets

Top 20 Islamic banks make up 55% of the total Islamic banking assets, concentrated in 7

countries, (GCC, Malaysia and Turkey)

The global Takaful business will reach $20bn by 2017, with 62% of current premiums

coming from the GCC

Islamic finance and insurance is the most prominent sector in the Islamic economy, with impressive growth rates and a global spotlight

Is Islamic finance making an positive impact on the markets it is operating in? Is it making a difference to ordinary consumers?

Halal Food

Key Features of the Halal Food Sector

The global market for Halal foods is estimated at $685bn a year

Muslim countries’ food industry imports are valued at $126bn, 12% of global food

imports

GCC food market was worth $83 billion in 2012, expected to rise to $106bn by 2017

(AT Kearney)According to IFANCA, US consumers spent

$15bn on Halal products in 2011

Food production dominated by non-Muslim countries such as Australia, New Zealand,

Brazil, USA, EU, India

The Halal food sector is an influential sector within the global food industry, with its own challenges and issues across the entire supply chain

With food production dominated by non-Muslim countries, how can we ensure the quality of Halal standards for consumers?

Halal Lifestyle

Key Features of the Halal Lifestyle Sector

The Halal Lifestyle market was valued at $2.1 trillion in 2011.

The Muslim population of 1.6 billion is growing at twice the rate of the global population

Global Muslim apparel market at USD $96 billion

Muslims represent ‘the fastest growing consumer segment in the world’ (AT Kearney)

Over the next 30 years, 70% of global population growth will be in Muslim

countries (The Future Report) University of Malaysia estimates the halal cosmetic & personal care market to be worth between US$5 bn and $14bn in

Muslim-populated countriesThere is increasing preference for natural and organic beauty and personal care products,

which are considered halal-friendly.

Halal lifestyle is a sector gaining in prominence as Muslim consumers around the world are increasing identifying with their Islamic roots

Are multinationals appropriately targeting this economic segment? Is there an opportunity for SMEs in this high-growth segment?

Halal Travel

Key Features of the Halal Travel Sector

With growing economic prosperity in Muslim countries, Halal travel is becoming a major segment of the global tourism industry

In a challenging global economic environment, how can travel sector stakeholdersaddress this lucrative, yet underserved, market segment?

MENA markets represent 60% of total global tourism expenditure

Muslim tourists globally represent a major niche market worth $126.1 billion in 2011

(excluding Hajj & Umrah)

Muslim tourism growing at 4.8% through 2020, higher than the global average of 3.8%

Global Muslim tourist spending is 12.3% of the worldwide total

Halal travel to grow 20% over next decade (Global Futures and Foresight)

SME Development

Key Features of the Islamic SME Development

62% of the Muslim world is under the age of 30, compared to 51% globally

Muslim countries rank much lower (avg 117) in getting credit for SMEs, compared to

developing countries (avg 89)

The Halal food sector in non-Muslim countries is primarily driven by small businesses, plus

the presence of some MNC’sArab youth unemployment is 35% for men and

45% for women (Nasser Saidi June 2013)

Arab world needs 60 million new jobs by 2020 (Nasser Saidi June 2013) Only 10% of MENA SME’s get bank financing

SMEs play a major role in most Muslim countries and their development is vital to the overall growth of their respective economies

Are SMEs being supported to become major players in their respective economies? What support should governments provide to SMEs?

Infrastructure Development

Key Features of the Islamic Economy Infrastructure Sector

Of the 300 Halal certification agencies worldwide, only 30% are registered legal

entities (IHI Alliance 2011)

There are no global standards for Halal food or an international regulatory framework for

the Halal market

No mandatory Shariah rules for Islamic finance either, only three set of standards:

At the Central bank level – the Islamic Financial Services Board (IFSB) develops best practice standards and regulations that central banks

can adopt

On the industry level - the AAOIFI develops Shariah, Accounting Auditing and

Governance that individual financial institutions can adopt

On a bank level – Shariah scholars and in house Shariah review teams regulate the day to day activities of each institution

Islamic economy infrastructure is scattered, with limited convergence on Halal standards across markets

How important is standardization and convergence for the Islamic economy? Is the current scattered landscape a hindrance for growth?