9 Flares Twitter 0 Facebook 0 Google+ 0 LinkedIn 9 StumbleUpon 0 Email -- 9 Flares ×
Sheikh Mohammed bin Rashid al-Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai. Dubai on Wednesday announced its plan to setup a central Sharia board which is in line with its vision to become the world's number centre for Islamic Finance products. 

Sheikh Mohammed bin Rashid al-Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai. Dubai on Wednesday announced its plan to setup a central Sharia board which is in line with its vision to become the world’s number centre for Islamic Finance products.

The government of Dubai has announced its plans to establish a central Sharia board to oversee all Islamic financial products used in the emirate.

The move is also expected to further develop an interest in the Islamic financial markets by encouraging government-linked entities to issue and list sukuk on the local equity market. The plan has been envisaged to strengthen Dubai’s reputation in the Islamic finance market and make it a global hub for all financial transactions based on Islamic principles. However, Dubai is expected to face stiff competition from London and Malaysia, which have a sound Islamic finance system and are actively involved in trading of sukuk (Islamic bonds). Currently, besides Malaysia, few countries have a central regulatory board and most Gulf countries have a decentralized model of regulation.

Expressing his ambitions for the emirate’s Islamic finance market, Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum, said that “we follow international standards of Islamic economies and will be the world’s number one centre for Islamic finance“. Under this vision, the Sharia board will try to establish uniform standards, structures and regulations for the Islamic finance market in the emirate. As elsewhere in the world, the board will comprise of scholars who will provide a ruling on whether financial instruments and activities are religiously permissible.

After the establishment of a government-level Sharia board, Dubai’s Islamic finance industry is expected to benefit from standard systems and structures, which may help in attracting business and providing it a significant boost. Investors will be attracted to the market because of reduced complexity and ready trading of these bonds on the local bourse.

Data of Thomson Reuters points out that new issues of sukuk jumped to about USD 121billion globally in 2012. However, Dubai’s did not feature as a prominent player in this market and most of the emirate’s issuers chose to list their bonds and sukuk in overseas bourses. As most debt issuers in Dubai are government-related entities, the creation of a Sharia board may help to lure them in listing their sukuk locally.

 

9 Flares Twitter 0 Facebook 0 Google+ 0 LinkedIn 9 StumbleUpon 0 Email -- 9 Flares ×