ISLAMIC ECONOMY

Dubai 2020 | ECONOMY | VIP INTERVIEW

TBY talks to Abdulla Mohammed Al Awar, Chief Executive Officer of Dubai Islamic Economy Development Centre (DIEDC), on the Islamic economy, collaboration, and knowledge transfer.

Looking at the three pillars of the Centre's strategy – Islamic finance, halal industry, and Islamic lifestyle, how is work under each pillar progressing?

The three economic pillars of the DIEDC Strategy, Islamic finance, halal industry, and Islamic lifestyle, were inspired from the foundations of the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to transform Dubai into the global capital of Islamic economy. The Centre's activities, initiatives, and/or projects, feed into one or more of the three economic pillars to boost the economic activity within them, which is one of the objectives of DIEDC's strategy. Naturally, increasing the economic activity of Islamic economy sectors will increase the contribution of Islamic economy to Dubai's GDP, as well as support Dubai's economic diversification drive, further reinforcing the emirate's position as a global Islamic economy capital. To complement the three economic pillars, we devised three enabling pillars that are also part of the DIEDC Strategy. The three enabling pillars intertwine with the economic pillars, and provide the needed support to be able to achieve our aim of boosting the Islamic economic contribution to Dubai's GDP. The first enabling pillar is knowledge, including research, education, and bridging the talent gap. The second is the Islamic digital economy, because we need to adapt to the various trends that will allow us to reach a wider audience more quickly and efficiently. If the Islamic economy sectors were to flourish, they would need to embrace technological and other innovative developments, such as fintech. The third enabling pillar is the development of Islamic standards to govern economic activity. All 36 initiatives that have been launched feed into one or more of these six pillars. The strategy is comprehensive and covers the entire spectrum of the Islamic economy. We have developed ways of measuring and highlighting how those economic pillars benefited Dubai and created economic value.

How do you measure the ways in which the Islamic economy contributes to Dubai?

We have been working closely with the Dubai Statistics Center, a strategic partner of DIEDC, for some time now to develop the best ways to measure and quantify the contribution of Islamic economy sectors to Dubai's GDP. Initially, it wasn't easy to take these statistics and conduct an accurate analysis, since some of the sectors had experienced growth independent of the growth of the Islamic component. Therefore, we had to develop surveys and communications that could gain a more nuanced perspective. DIEDC, in collaboration with other institutions, has been doing that for the last two years. Last year, for the first time, we issued the study of the Dubai Statistics Center on the contribution of the Islamic economy to Dubai's GDP. Measuring Islamic finance and internal halal trade in Dubai, the contribution to Dubai's GDP was close to AED31 billion as of 2016. In June 2019, we announced the new results with two new updates. First, the study was expanded to cover more than just Islamic finance and halal trade, so some of the lifestyle components such as sharia-compliant food in hotels, were measured, and other leisure activities were added. Some of the manufacturing was also measured, such as fabrics being produced that are used in sharia compliant clothing. Taking into account the additions, the Dubai Statistics Center revised last year's study to make comparisons possible. Using the expanded scope, 2016 registered a contribution of AED39.9 billion, which increased to approximately AED41 billion in 2017, registering a growth rate of 2.4% and accounting for 10% of Dubai's GDP.

How does DIEDC coordinate this contribution to GDP?

We are committed to advocate for the Islamic economy, and to promote Dubai as the global capital of Islamic economy. In that regard, we work closely with our strategic partners to advocate for and implement various initiatives and projects. We also leverage our international network of industry stakeholders to ensure complete backing and support. For example, halal certification was unheard of three to four years ago. While most items that are imported into the UAE are sharia compliant, companies did not go beyond in getting the halal stamp on their products. Now, a significant percentage of commodities in retail outlets are stamped with the UAE halal mark. Producers understand the benefit of increased sales due to having this certification; this includes not only local producers, but international companies such as McDonalds and Burger King, too, whose advertising now reflects the halal marks. This cultural shift happened because of Dubai's vision to become the global capital of the Islamic economy. DIEDC is the centralizing and coordinating body, and we continually monitor and facilitate the progress of initiatives. At inception, the 36 initiatives were actually the ideas of the relevant stakeholders to support the vision of His Highness Sheikh Mohammed bin Rashid Al Makotum. Their realization required a central body facilitating and coordinating their research, development, and implementation. The sukuk initiative by the Dubai Financial Market and NASDAQ Dubai was the first initiative with the goal to make Dubai a leading hub for the issuance and listing of Islamic bonds. That initiative has been going strong since 2013, and will continue because we want to maintain our number-one position. In just less than a year and a half, Dubai went from number three globally, in terms of sukuk listing value, to number one. The value of active sukuks listed in Dubai is now above USD60 billion, including the recent celebratory announcement of the government of Indonesia listing USD2 billion of their green sukuk on NASDAQ Dubai. The cornerstone of the center's success has been its structure and collaborative approach. In terms of working with stakeholders, there is always the bottom-up approach where we recommend to the board before it gets adopted and then implemented. Looking back at the last five years, the strategy has worked well since we have been able to sustain the momentum of these initiatives. These are now within the DNA of Dubai's economy.

How does collaboration translate into making Dubai the Islamic capital of the world?

Our philosophy revolves around collaboration with other jurisdictions and the universal vision to make Dubai the global capital of the Islamic economy. We cannot achieve that vision if we are not working with other centers and jurisdictions. The majority of our initiatives are global in scope, such as the halal industry. In 2016, in partnership with the Emirates Authority for Standardization and Metrology, we attended the International Halal Accreditation Forum to harmonize the processes and standards that the accreditation bodies use when they accredit halal certified companies. There are many accreditation bodies around the world and each has its own processes and standards. We conceptualized the establishment of one platform where these bodies join hands, harmonize, and develop a process that gets implemented across those certifications, paving the way for international trade between any two jurisdictions. This was set up in 2016 with nine countries, and today there are over 35 countries that are represented through their accreditation bodies. Surprisingly to some, several are in non-Muslim countries because there are companies that produce halal products in countries such as the UK, the US, New Zealand, Australia, and Italy. Ultimately, the goal is to reach a globally unified halal standard.

Do you believe that the direction of knowledge transfer has shifted whereby other markets are looking to Dubai as the standard?

We have proof that this has happened because we have over five Memorandums of Understanding with other jurisdictions who want to implement our strategies. We have MoUs with some of the CIS countries, South American countries and European countries. In addition, we recently signed an MoU with Hong Kong through the Hong Kong Trade Development Council to collaborate on the development of the Islamic finance and halal industries. Many believe in the potential that these sectors hold, and the flourishing future they could create for their economies, but they would like the assistance of DIEDC. We have seen an increasing interest from others to learn more about what we are doing.

How is the center leveraging Dubai Expo 2020?

It is a pivotal event, not just for DIEDC, but for Dubai and the wider UAE. The benefits of Expo 2020 are comprehensive. Expo's themes of opportunity, mobility, and sustainability, naturally fit well within the Islamic economy landscape. Take sustainability: many values we talk about in terms of the Islamic economy are actually related to creating sustainable economies. Whenever we talk about Islamic finance, the differentiating factor is that the principles of Islamic finance are engineered in a way to help develop a sustained economic environment. Halal food has the same concept of sustainability, because it involves several quality checks. We are working with the Expo 2020 team to see how we can fully leverage the groundbreaking event through conducting activities together.