JEDDAH — "For more than four decades now, Islamic finance has emerged as a nascent industry gaining traction around the world. It has gained footprint in mostly Muslim-dominated countries of Asia and Middle East; ripe for growth in traditionally non-Muslim countries mainly South America and Europe; and its future markets are in North America, Central Asia and Ausralia" said Khaled Al-Aboodi, CEO of Islamic Cooperation for the Development of the Private Sector (ICD), on Monday. In his keynote address at the IFN forum Saudi Arabia 2015, Al-Aboodi said, "Today's forum is a clear example of our collective efforts in the Muslim world to promote Islamic finance and to utilize it as an integrated element of our economic growth and development framework. Although MENA in general, and Saudi Arabia in particular, have very good lessons to share, but we are still in need of acquiring more knowledge and experience, which I hope it shall materialize after your deliberations in this forum. I see today's forum as a good opportunity to help boost Islamic finance for reaching its full potential in a sound and sustainable manner." ICD is a subsidiary of the Islamic Development Bank Group and is one of the main drivers of Islamic finance. The forum, at Le Meridien in its fourth year, brought together leaders in the local and global markets to share expertise and discuss cross border opportunities in a thriving Saudi Arabian market. Al-Aboodi, while reviewing the latest global economic situation in the world, said growth remains moderate and uneven. "Although the advanced economies are witnessing some dynamism, the post crisis legacies are still preventing them from acceleration and high growth. The growth trajectories in emerging and developing markets vary significantly across countries, and in general, the outlook shows more weakening due to low prices of oil and other commodities, as well as the slowdown in China. As far as the Middle East and North Africa (MENA) region is concerned, the economic growth prospects is further hampered by geopolitical tensions and security challenges in some countries," he said. While highlighting the emerging Islamic finance industry, Al-Aboodi said, "Today, the size of Shariah compatible assets stands above $2 trillion, practically a ten-fold increase from a decade ago, and highly outperforming the growth of conventional finance. Going forward, the assets of Islamic finance are projected to reach $3.5 trillion in 2020. Together with Malaysia, the countries such as Saudi Arabia, UAE, Kuwait and Qatar are leading jurisdictions in global Islamic finance sector." "Though Islamic banking currently accounts for the lion's share of 80 percent of the total assets of the industry, the development of Islamic finance sector is also visible in the expanding range of services and products beyond the Islamic banking. One example is the burgeoning global market interest in Sukuks, many of which are increasingly being issued and bought outside the Islamic world. This key product of Islamic capital market, managed to breach the $100 billion mark in terms of new issuance. The Takaful market is yet another success. It has been going through solid and double-digit growth in recent years, " he added. "We all agree that a new paradigm has to be adopted in today's global financial circumstances. One that is built on the principles of justice, risk sharing and direct linkages with real economy and avoidance of excessive speculation. Coincidently we know that, by default, these are all features that are embedded in the backbone of Islamic finance, which allows it to contribute to a greater stability and a more sustainable growth trajectory of the globe. "It has been a long time that Islamic Development Bank (IDB) Group has already recognized this fact and has been applying it into its day-to-day operations in its 56 member countries. Nowadays, other IFIs has also realized the Islamic finance's potential as an alternative and healthy source of financing for inclusive growth and sustainable development. Islamic finance bears a wide range of solutions to help achieve sustainable development goals in categories such as poverty, inequality, sustaining ecosystem and cities, health, education, shelter etc.," he added. "We in the IDB Group, realize that the shared nature of the global development challenges of today calls for collective action that involves governments, International Organizations, civic societies, private firms and people. Boosting private sector and building vibrant partnership is one of the vital prerequisites for the successful accomplishment of the development goals in the post-2015 era. A dynamic role of private sector as a driver of sustainable economic growth brings with it infinite opportunities in various value creations.," Al-Aboodi said.
