Dubai sets sights on Islamic finance hub

In the wake of the global economic crisis, investors are looking for well-governed financial products and centres to safely put their money. In many ways this is behind the growing international appeal for Islamic financial products, like sukuk (Islamic bonds). Islamic finance refers to economic practices that comply with Sharia, which generally prohibits interest, short-selling and certain forms of financial trading. "It was this type of opaque, even fraudulent, financial transactions driven by a desire for short-term, unsustainable profits that were at the root of the global financial crisis. As a result, investors are turning to products that are well-governed and run to the highest ethical standards", said English language local daily in its editorial on Saturday. It noted that His Highness Sheikh Mohammad Bin Rashid Al Maktoum, the UAE Vice President and Prime Minister of the UAE and Ruler of Dubai, earlier this year announced plans to make Dubai a centre of the global Islamic economy and finance industry. "In a demonstration of quick and efficient implementation of development programmes in Dubai, on Wednesday, he launched an executive plan to transform Dubai into a centre for Islamic bonds. The initiative will see the creation of a centre for issuing, listing and trading sukuk. It will encourage companies and countries to issue sukuk instead of conventional bonds," the paper said.. It underscored that a key part of the initiative is the creation of a unified government Sharia board that will create common standards and regulations for the Islamic finance industry. The lack of common standards and regulations has been one of the weaknesses in the governing of the international industry, thus far. "There is a growing market for Islamic bonds. Besides investors who are looking for safe havens, there is increasing demand for finance for infrastructure and other investments projects in emerging markets, according to financial experts. Dubai is especially well-positioned to serve the countries of the Middle East and Africa," the paper said. It underlined that the plan to make Dubai a centre of the global Islamic economy will also see it emerge as a hub of the halal food industry and Islamic contract arbitration, among others. "As always, Dubai is using its culture, heritage and competitive advantages to become a global leader," the paper concluded.