Essa Kazim, the chairman of Borse Dubai, which owns the emirate's biggest financial markets, is looking forward to a "wave" of sukuk activity as Dubai seeks to become a global centre for Islamic business.
Borse Dubai chairman says timing is right for Islamic economy
Suddenly, the Islamic economy is at the heart of the revival under way in Dubai, and Essa Kazim, one of the leading players in the emirate's financial infrastructure, is convinced the strategy will pay off.
Last week, underlining Dubai's new-found confidence in global financial markets, the emirate raised US$1.25 billion (Dh4.59bn) in government sukuk (Islamic bonds) at competitive interest rates.
Now, Mr Kazim, the chairman of the Borse Dubai, believes, the time is right for corporate issuers to back Dubai's ambitions to become a leading global hub for Islamic business, in finance and commerce.
"Sukuk issuance and listing is one of the areas where Dubai can be a hub, as part of the broader strategy to capitalise on our existing infrastructure and build a full Islamic economy," said Mr Kazim.
Over the past three years Dubai's advantage in sukuk issuance has slipped. According to figures from Ernst & Young, the international accounting firm, last year the UAE ranked third behind Saudi Arabia and Malaysia in terms of Islamic assets under management.
Part of that decline was because of sukuks reaching maturity over the past three years, said Mr Kazim.
Implementation of the strategy, announced by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, is still at "an early stage", said Mr Kazim.
"There is a need to converge towards one standard. Then, if an American bank were issuing a sukuk in the US you'd hope they would use the Dubai standard."
There were two main parts to the Islamic strategy, Mr Kazim explained: financial and economic.
"In the financial aspect, we must promote Dubai to be the hub for sukuk and other Islamic issuance. This is not just about sukuk, but about other forms of financial products too. There is a need to develop takaful and re-takaful (Islamic insurance and reinsurance) markets too.
"Other financial products are also desirable, including derivatives, as long as they are asset-backed and are given approval in a fatwa," he added.
A fatwa is a certificate of approval for a product issued by a recognised Islamic financial scholar.
On the broader concept of the Islamic economy, Mr Kazim said: "It is not just halal food, although there is a huge demand for that. In the Middle East, you assume food is halal, but in other places where there are large numbers of Muslims, there is no such guarantee. With 1.6 billion Muslims in the world, the demand is certainly there.
"But there is also demand in a number of other areas, like cosmetics, alcohol-free perfumes and medicines. We need to create a body of scholarly opinion that Dubai sets the global standard."
He compared the potential market for Islamic products with the global growth in "green" and "organic" products.
"To some extent, it is a marketing strategy, but behind the marketing tool there is real Islamic activity." said Mr Kazim.
Ernst & Young predicts the global market for Islamic financial products could be worth $1.8 trillion by the end of the year. Other estimates say it will hit $2.6tn by 2015.
Mr Kazim recognised there were challenges associated with the Dubai Islamic strategy. "To build the full Islamic economy is a challenge, and it will be an ongoing process. In 10 years, the Dubai International Financial Centre has grown to be the financial hub of the region.
"In the next 10 years' time we hope to have an equally thriving Islamic economy. In the same way, we believe Dubai will be recognised by more and more people as the number one Islamic centre. It's an organic process," he said.
Mr Kazim said the Arabian Gulf region had started to "decouple" from western financial markets that had been worst affected by the financial crash of 2008-09. "We are much less vulnerable now than we were back then, especially with the oil price at around $110 per barrel.
"We're seeing this in the Dubai Financial Market General Index, which is one of the best performing in the world over the last 12 months.
"Just in the first 27 days of this year, trading on the DFM has gone up 450 per cent by value," he added.