Sunday, October 4, 2015

GLOBAL ISLAMIC ECONOMY SUMMIT

Six things to expect at the summit

The event will focus on the pillars of the

Islamic economy

The global urban Muslim

Young and digitally connected — a new demographic redefines

the marketplace

Blending faith and fashion

The market for halal fashion is growing, driven by a huge consumer base of Muslims

Online: www.gulfnews.com/GN-Focus Facebook.com/GNFocus Twitter.com: @GNFocus Instagram: @GNFocus

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Muslim consum-ers are increas-ingly becoming a mainstay of

the global economy. Their expenditure on food and lifestyle including halal fashion, travel and me-dia grew 9.5 per cent to about $2 trillion (Dh7.34 trillion) in 2013 from pre-vious years’ estimates and is expected to reach $3.7 trillion by 2019 at a com-pound annual growth rate of 10.8 per cent, according to Thomson Reuters’ State of the Global Islamic Econo-my 2014-2015 Report.

Add to this Islamic fi-nance assets of $1.66 tril-lion as of 2013, which could go up to $3.5 trillion by 2019, with anticipat-ed growth rates of about 15 per cent a year.

“Islamic finance is the fuel that drives the Islam-ic economy,” says Hussain Al Qemzi, CEO of Noor Bank. “It is common to the various sectors that make up the Islamic economy. Without it, the Islamic economy would not exist. How can anything be con-sidered halal, whether it is food or pharmaceuticals, family-friendly tourism or cosmetics, if it is the product of conventional finance investment?”

There is growing evi-dence that Islamic econ-omy will have a signifi-cant impact on the global

adding that “ideas to help Muslims better navigate this growing market and live a more balanced and content life carry huge business potential”.

Islamic finance is cur-rently considered the most developed sector within the Islamic econ-omy. The global number of Islamic financial insti-tutions, including banks, takaful companies and investment and financing firms, has already exceed-ed 1,500. Global accep-

By Arno MaierbruggerSpecial to GN Focus

economic landscape. Its customers are sharing their values, and such value-based needs are a steady driver for all sec-tors. “With impressive growth figures predicted over the next years, diverse sectors within the halal

lifestyle market are as-serting themselves in the global economy, boosted by the buying power of Muslim consumers,” says Nadim Najjar, Managing Director of Thomson Reu-ters Middle East and North Africa. A Muslim start-up

culture is also emerging, which is another driver for Islamic economy that can become a game changer for the world economy.

“Muslims across the world are increasingly receptive to the diverse and sophisticated Mus-

lim-friendly products and services that have become available over the years, especially in Western countries and multicultur-al societies,” says Abdullah Mohammad Al Awar, CEO of the Dubai Islamic Econ-omy Development Centre,

There is a big need for Islamic banks to differentiate themselves in terms of innovative products and services to compete with conventional banks, says Noor Bank’s Hussain Al Qemzi. “Innovation in Islamic finance faces challenges from within. The lack of globally accepted regulations among scholars of what constitutes Sharia compliance is the most commonly cited challenge.” he adds.

— A.M.

INNOVATION IN ISLAMIC FINANCE

Top country for the global Islamic economic indicators:

MALAYSIA TOP 10

MalaysiaUAEBahrainSaudi ArabiaPakistanOmanKuwaitQatarJordanIndonesia

Rising star on the global scene

Abdullah Mohammad Al AwarCEO, Dubai Islamic Economy

Development Centre

Nadim NajjarManaging Director, Middle East and

North Africa, Thomson Reuters

Hussain Al QemziCEO,

Noor Bank

Rafi-uddin ShikohCEO and Managing Director

DinarStandard

Getty●● Apart from Islamic finance, sectors within the halal lifestyle market are also making their mark

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●● The UAE retains the second spot in the 2015 State of the Global Islamic Economy Report

ECONOMIC POWERHOUSE Total global market (2013): $16tn

Current Muslim market

$1.8 trillion (food and lifestyle expenditure)

2014Potential market

$2.6trillion2020

2014Current Muslim market

$142b(11% of total global market)

2020Potential market

$233b(8.6% compound annual growth)

2014Current Islamiccommercial banking market

$1.3tn(1.27% of global commercial banking assets)

2020 to optimal scenario (assets)Potential Islamic commercialbanking market

$2.6tn(9.9% of global commercial banking assets)

2014Current Muslim market

$1.1tn(17% of total global market)

2020Potential market

$2.5tn(5.8% compound annual growth)

Halal food Media & Recreation Fashion

Travel Islamic finance

TOP 3 countries MALAYSIAPakistanThe UAE

TOP 3 countries SINGAPOREThe UAELebanon

TOP 3 countries ChinaThe UAEItaly

TOP 3 countries MALAYSIABahrainThe UAE

TOP 3 countriesMALAYSIABahrainUAE

Pharma & Cosmetics

TOP 3 countries SINGAPORE EgyptMalaysia

2014Current Muslim market

$179b(5% of total global market)

2014Current Muslim market

$230b(11% of total global market)

2020Potential market

$247b(5.9% compound annual growth)

2020Potential market

$327b (6% compound annual growth)

Total global market (2014)$3.5tn

Total global market (2014)$2.1tn

Total global commercial banking assets (2014) $105.7tn

Total global market (2014) $6.7tn

Total global market (2014) $1.3tn

2014Current Muslim market

$75b (7% of total global market)

2020Potential market

$106b(5.9% compound annual growth)

2014Current Muslim narket

$54b(6.8% of total global market)

2020Potential Muslim Market

$80b(8% compound annual growth)

PHARMA COSMETICSTotal global market (2014):

$1.1tnTotal global market (2014)

$742b

Current total Islamic financemarket (2014) $1.8tn

Source: State of the Global Islamic Economy Report 2015

●● As countries around the world continue to experience uncertainty, the Islamic economy is emerging as a new growth driver

SEE OVERLEAF

Big on numbersOrganisers expect more than 2,000

policymakers, thinkers and business leaders to attend the Global Islamic Economy Summit (GIES), which is taking place on October 5 and 6 at Ma-dinat Jumeirah in Dubai. There will be more than 60 international speakers over the two days speak-ing on various aspects of the Islamic economy.

The Islamic economy The Islamic econ-omy is large,

being fuelled by 1.6 mil-lion Muslims around the world. And it is growing fast, with the global com-munity expected to grow at nearly double the rate of the non-Muslim pop-ulation. In total, Muslims are projected to spend al-most $3.7 trillion (Dh13.6 billion) by 2019 in the core sectors of the Islamic economy: finance, the ha-lal industry, family tour-ism, Islamic knowledge, Islamic arts and design,

the Islamic digital econo-my, and Islamic standards.

Islamic financeThe Islamic fi-nance market will

be a key focus at GIES. Sessions during the event will explore aspects of the Islamic finance sector, in-cluding inclusion; invest-ments into the halal food and beverage and travel sectors; and the institu-tion of awqaf. Sessions will also feature CEOs of Islamic finance institu-tions addressing the re-lationship between the

sector and the broader Is-lamic economy — wheth-er those operating in the Sharia-compliant finance sector see themselves as operating in the wider Is-lamic economy landscape.

Big halal pharma The Muslim phar-maceutical mar-

ket is expected to worth $103 billion by 2019. But with the rise of the other sectors has come issues related to the surround-ing standards, auditing procedures, regulatory frameworks for certifi-

cation and accreditation. Panel experts will dis-cuss these topics during GIES, including how a standardised regulatory framework could lead to more investment and in-novation. Another panel discussion will focus on efforts to create a global halal brand, something that is currently lacking.

Travel and fashionUsually focused on travel for Hajj

and Umrah, GIES will hear how Muslim expenditure on things such as holidays, leisure, business, education and health travel is growing. Panelists will also speak about how the convergence

of travel, food, fashion and entertainment can mutually benefit from each other’s growth, and hear from entrepreneurs and investors who are in line to gain from this. Panel essions will also address how and why Islamic art is becoming more attractive as an investment option, whether it will go mainstream and the impact it is expected to have both on collectors and artists.

AwardsThe winner of the Islamic Econo-my Award, which

recognises businesses that have added to the welfare of the Muslim population, will be revealed at the summit, as will the recip-ient of a Lifetime Achieve-ment Award. n

GLOBAL ISLAMIC ECONOMY SUMMIT2Sunday, October 4, 2015 | Gulf News

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By Gillian Sarah DuncanSpecical to GN Focus

6 things you can expect at GIES●● The summit will offer insights into the various pillars of Islamic economy

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tance is growing, as is competition between Islamic and conven-tional finance. Larger Islamic banks are driv-ing the industry by de-veloping new products that add value to exist-ing offerings, which, in turn, accelerates the transition to Islamic banking, particularly for non-Islamic en-tities, which, for ex-ample, have already discovered products such as sukuk as viable alternatives to conven-tional bonds.

“Islamic finance has a variety of benefits,” says Al Qemzi. “For example, its appeal is universal whereas conventional finance is shunned by many Muslims. It also offers a better, more ethical way of doing business. Since the global finan-cial crisis, concerns about conventional banking and its way of doing business and its high-risk products have led to an increased appetite for an alterna-tive ethical banking. Islamic finance offers that alternative.”

Apart from Islamic finance, key oppor-tunities can be found in the halal food in-dustry, where there are investment op-tions across the value chain, the halal travel market, especially in family, business and luxury travel, and hos-pitality. In halal fash-

ion, opportunities lie in e-commerce plat-forms, retail outlets, fashion branding, and franchising and dis-tribution partnerships especially for the West-ern Muslim markets as the largest segment by value.

The Muslim media and recreation sector include segments such as lifestyle marketing, digital advertising, gaming, social media and global halal brand-ing. In the pharmaceu-ticals and cosmetics sector, there is huge potential for products such as halal vaccines, ingredients manufac-turing, as well as retail and wholesale part-nerships.

“2015 marks the tip-ping point for Islam-ic lifestyle economy services moving from establishing a busi-ness case to focusing on building success-ful business models and quality execution strategies,” says Ra-fi-uddin Shikoh, CEO and Managing Direc-tor of DinarStandard, a New York-based ad-visory firm specialising in the Islamic econo-my. “As more Islamic economy success sto-ries emerge the mo-mentum is also start-ing to shift towards solutions that have a wider, values-driven, global audience appeal for socially responsi-ble products and ser-vices.” n

●● Dubai government plans to make the emirate the global capital of the Islamic economy by 2020

Gulf News Archives

CONTINUED FROM PAGE 1 Young, urban Muslims redefine the marketplace

When young Muslims are covered in the news, it’s often for political reasons. From the hashtag #IllRideWithY-

ou that went viral in Sydney following last year’s café siege to the Muslim teen who was arrested in Texas last month for making a “bomb” — actually a clock — there’s a common thread of minorities being first discriminat-ed against, then venerated in soci-eties across the world. In his 2014 book, Rebel Music: Race, Empire and The New Muslim Youth Culture, Colum-bia University lecturer Hisham D. Aidi describes cultural bridges being built by young Muslims across the world. “In Eu-rope today, Muslim youth are weaving Islamic, Afrocentric, Asian and Latin elements to produce new identities and movements,” writes Aidi.

But a topic far less discussed is young urban Muslims as consumers.

“Young Muslim consumers are simply an untapped demographic for big brands and businesses,” says Am-ani Al Khat, Editor-in-chief and Founder of Muslimgirl.net, a platform with stories for and by young women across the globe that aims to “take back the narrative” surrounding modern Islam. In an email to GN Focus, she explains that a lack of products catering to them impacts young urban Muslims everywhere, particularly those in the West. “When DKNY launched its Ramadan line a year ago, it released it only in the Middle East and missed out on the interest it garnered among Western Mus-lims, who don’t have these ready-to-wear lines from the mainstream brands they’re familiar with.

“Brands are seeing the growing popularity of hija-bi beauty and fashion gurus on Instagram and it only makes sense that they would cater to it,” says Amani. She adds that social media breeds ecosystems of intense brand ambassadorship, loyalty and commercialisation for big brands.

Travel is another industry to watch. Irfan Ahmad, Founder and CEO of Irhal, a web- and app-based halal travel platform he runs from his office in Dubai Silicon Oasis (DSO), says 108 million Muslim tourists spent more than $140 billion (Dh514 billion) last year.

“The halal tourism sector is the fastest-growing seg-ment of the travel industry — it is growing faster than even Chinese tourism,” he explains, following up with a list of examples. “The Ritz-Carlton in Berlin is offering halal food to its guests; the Grand Hotel in Vienna has hired a Lebanese chef to cater to the needs of Muslim travellers; Orlando Airport has opened a prayer room for Muslims; Tokyo airport has halal food outlets and a prayer room.

“There are more than 1.5 billion Muslims in the world. Most are young. If e-commerce is not your cup of tea, start an entertainment app. Video is rapidly becoming the most consumed format on smartphones. Gaming is another big industry. Stay within the halal space and create something that is currently trending globally. Re-

●● As millennials take over, what does this mean for the Islamic economy — and the companies servicing it — the world over?

Shutterstock and Reuters●● Companies ready to cater to the needs within the halal space have great scope

Irfan AhmadFounder and CEO,

Irhal

Amani Al KhatFounder and Editor-in-chief,

Muslimgirl.net

Waleed BarhajiBusiness Head of Consumer

Finance, Noor Bank

member, there is no shame in copying a successful model that has worked in the West.”

Ahmad, whose company was named Best Islamic Start-up by DSO last year, also has advice for entrepre-neurs looking to cash in on the booming Islamic econo-my. “How do you start the world’s largest halal e-com-merce store?,” he asks. “By thinking big but starting small — create a store where you sell halal food, make money. Add halal clothing, make more money. Add more products. Make even more money. Expand beyond your home country.”

He advocates businesses hire the kind of people they are targeting. “Make young Muslims your partners,” he says. “Micropayments are growing in importance. Pay them for their efforts. YouTube pays people who have created content. You can, too. Incessantly scout for tal-ent. Successful companies are not one-man shows.”

Islamic finance is another area where people are spending big money. “Young, affluent Muslims are like-ly to be interested in the full range of Sharia-compliant products, which include wealth management solutions that encompass sukuks,” says Waleed Barhaji, Business Head of Consumer Finance at Noor Bank.

He adds that locally based banks may hold advantage over multinationals. “While there definitely is a segment that would prefer a multinational brand, the banking de-cision would ultimately be driven by the following gener-ic factors: product range and features; accessibility and convenience — the branch network, online and mobile banking functionality, and user experience; and quality of service. Local banks may actually have an advantage over multinationals that operate an Islamic window, as some customers would prefer to bank with a fully Sha-ria-compliant entity.” At Noor Bank, the fastest-growing segment is young professionals, he says. n

By Riaz NaqviStaff Writer