The UAEs Central Bank is calling for the establishment of a national sharia board, Mohammad al-Bishri, senior economist at the central bank said at the Forum of Legal & Sharia Experts in the Islamic Finance Industry.
In the revision of the UAEs draft financial services law, which aims to make banks more resilient, the Central Bank will recommend the creation of a sharia higher committee, Al-Bishri said.
Islamic finance chiefs have been stressing the need for a national board for years. Currently, there is no overarching body that oversees the individual banks and institutions sharia boards, which sometimes leads to conflicting recommendations by Islamic scholars.
Lack of national regulatory infrastructure for the Islamic sector also means that fatwas are not always legally enforced, which can lead to confusion about regulators jurisdictions and Islamic finance mimicking conventional products.
To address these issues, Dubai is unveiling a host of initiatives to make the emirate a globally significant Islamic economy. They will focus on developing not only the Islamic finance sector, but also a sharia-compliant legal and institution framework, as well as production and services sectors such as food, cosmetics, education and tourism.
There are still gaps that need to be filled, said Essa Kazim, chairman of Dubai Financial Market and secretary general of the Development of Islamic Economy in Dubai Supreme Committee. The global demand for additional sukuk is estimated at $200bn a year, which shows there is a large need for more sharia-compliant products. That goes for consumption products as well, and these needs present an opportunity for all of us.
However, the UAE will have to compete with more established Islamic hubs such as Malaysia, which has separate governmental departments dedicated to overseeing sharia-compliant practices and houses a large base of Islamic finance infrastructure.
UK consultancy PricewaterhouseCoopers expects the UAEs Islamic economy to grow at around 6 per cent in 2013. Globally, the Islamic finance sector grew 20.4 per cent to reach about $1.6 trillion in 2012.