DUBAI: Dubai unveiled plans yesterday to become a centre for business that follows Islamic principles in areas from banking and insurance to food processing, tourism and education.
With a freewheeling commercial culture and a diverse population with cosmopolitan lifestyles, the booming emirate of 2.1 million people is not known for its Islamic scholarship.
But in the past few decades, Dubai has used its international ties to become the Gulf’s main centre for finance, trade and travel. Officials said they would now focus on business related to the religious beliefs of the world’s 1.6 billion Muslims. “The total foreign trade of the Muslim world is $4 trillion. This shows the potential that is available for Dubai,” Mohammed Al Gergawi, Chairman of Dubai Holding, said.
In finance, Dubai wants to become a top centre for the issuance and trading of Islamic bonds, which are structured to avoid the payment of interest. It aims to rival the main hubs for Islamic bonds, Kuala Lumpur and London, by creating a set of clear, commonly accepted standards.
Abdulaziz Al Ghurair, chairman of the authority overseeing Dubai’s financial centre, said the emirate would also focus on Islamic re-insurance. In conventional insurance, risk is transferred from one party to another; under Islamic rules, risk is shared among members of an insurance fund.
Because there are only 19 Islamic re-insurance firms globally, Islamic insurers are forced to transfer some of their risk to conventional re-insurers, creating a business opportunity for Dubai in establishing more firms, Ghurair said. He predicted the global Islamic re-insurance market would grow to $20bn by 2020 from $11bn at present.
Islamic endowments, estimated to be worth hundreds of billions of dollars globally, are another area which Dubai is targeting.