Global Forum on Islamic Finance 2013

About Islamic Finance:

The continuing volatility in bond and equity markets combined with the uncertainty surrounding the Eurozone has opened up the Islamic finance industry to a new segment of potential investors looking to diversify away from their traditional investments. High net worth investors and their wealth advisers are primarily concerned in the current environment with wealth preservation, and many are looking to reduce their exposures to the conventional financial institutions.

The Islamic finance industry currently stands at an estimated $1trn with Deutsche Bank forecasting that the Islamic market will almost double in size over the next three years to $1.8trn in assets. There are several drivers contributing to this growth; the Sukuk (Islamic bond) market and the Takaful (Insurance) industry. Islamic finance market will continue to mature and expand on the back of increased awareness among investors of the benefits of Islamic finance.


According to Zawya, the leading online business intelligence platform focusing on the Middle East & North Africa, there was a record number of Sukuk issues in November 2011, totaling $8.86bn. 2011 was therefore a record year for the Sukuk market with over $79.5bn issued in the first 11 months of the year. The Sukuk market is only half of the story when it comes to growth of the Islamic finance industry. The Takaful, or Islamic insurance, industry has seen unmatched growth in recent years.
Ernst and Young predicted that the global Takaful industry would reach $25bn by the end of 2015. While arguably ambitious, the growth projections again serve to demonstrate the demand for Islamic products and moreover suggest that the Takaful industry will remain a powerful growth catalyst for the Islamic asset management over the next decade
The consortium building Abu Dhabi's new airport terminal is close to securing a 4-billion dirhams ($1.1 billion) financing deal, which will be mainly Sharia-compliant. Veteran Geneva-based banker and Islamic finance expert has teamed up with Saudi adviser Wafi International to target the Islamic endowment market, a $500 billion capital pool. Waqf, or charitable endowments invested according to Islamic principles, are often used to fund schools and hospitals, but the charitable trusts that generally manage them tend to produce poor returns. Because of the largely informal nature of the market, estimates of its size vary widely. USAID, the United States' international aid body, said philanthropic giving in Muslim communities worldwide was between $250 billion and $1 trillion a year.
The Malaysia government would like to see citizens saving more and having larger pensions. One of those new efforts being promoted by the government is the option of putting pension money in Islamic banks. New regulations are allowing the Employees Provident Fund (EPF) to give those with pensions the option of putting portions, not all, of their pension into Islamic Sharia-compliant areas including Sukuk and halal stocks.
Pakistan's regulator has introduced new Takaful (Islamic insurance) rules designed to boost competition and lift the sector's market share by allowing the entry of conventional players. The rules make Pakistan the second country after Indonesia to officially allow Takaful windows, which enable firms to offer Sharia-compliant and conventional products side by side, provided client money is segregated.