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Khaleej Times
20-05-2025
- Business
- Khaleej Times
The UAE's Islamic finance and halal strategy could boost the industry
The UAE cabinet's recent approval of the strategy for Islamic finance and halal industry is likely boost the industry, a top agency said. According to a report by Fitch Ratings, the UAE Islamic finance industry is long-established and it is expected to continue to expand in the short-to-medium term on the back of significant bottom-up and top-down demand and regulatory initiatives to further deepen Islamic finance ecosystem and infrastructure. 'Details of the new strategy are yet to be revealed, and it is to be seen what steps the government will take to achieve its targets and what challenges it might face. Fitch will continue to monitor these developments,' the agency said in a report. According to the Cabinet decision, the UAE will aim to more than double the country's Islamic banking assets to Dh2.56 trillion ($697.5 billion) from Dh986 billion ($268.4 billion), local sukuk issuances to Dh660 billion ($179.8 billion) and international sukuk listed in the UAE to Dh395 billion ($107.5 billion) by 2031, among other objectives. The cabinet approved the formation of a committee chaired by the central bank's (CBUAE) governor to implement the strategy. Islamic banks' yearly assets growth outpaced conventional banks, according to the CBUAE, with continuation expected over the medium term. 'However, these ambitious goals could face increasing competition from large conventional banks who benefit from strong government links. The evolving and additional sharia-compliance requirements could pose risks for the Islamic finance industry and sukuk issuance trends,' Fitch said. The UAE Islamic finance industry is estimated at over $285 billion at end of the first quarter of 2025. Fitch rated $28 billion of UAE sukuk at the end of the first quarter, 92.1 per cent of which were investment grade. About 39.2 per cent of sukuk issuers are in the 'A' category, followed by 34.5 per cent in the 'BBB' category, 18.5 per cent in the 'AA' category, with the rest in the 'BB' and 'B' categories; all issuers have stable outlooks. 'About 50 per cent of sukuk issuers are financial Institutions, but diversity is rising with the remaining 50 per cent split between corporates, infrastructure and project finance, international public finance and sovereign,' Fitch said. Fitch rates five investment-grade Islamic banks in the UAE (60 per cent in the 'A' category; 40 per cent in the 'BBB' category), along with one takaful company (Abu Dhabi National Takaful Company; A-/Stable) and one Shariah-compliant corporate (Emirates REIT BB-/Stable). No rated Islamic finance issuer or sukuk defaulted in 2024 and in end of the first quarter of 2025, data showed. The UAE is a pivotal player in the global sukuk market, with a 6.5 per cent share of the global sukuk outstanding as of the end of the first quarter, placing it fourth globally (all currencies). Also, the UAE is the fourth-largest US dollar debt issuers in emerging markets (excluding China), and the third-largest issuer of ESG bonds and sukuk in the end of the first quarter. 'We expect Nasdaq Dubai to remain among the top listing centres for dollar sukuk globally, with the venue listing more sukuk than conventional bonds and equities combined in 2024,' Fitch said in its report. The sukuk share of UAE debt capital market (DCM) outstanding reached about 18 per cent in the 25 (2024: 19.9 per cent), while sukuk were close to half of all dollar issuance (1Q24: 40 per cent). Sukuk issuance in all currencies in the 4M25 grew 28 per cent yoy to $6.5 billion, while conventional bonds were up 6.7 per cent. In April 2025, following the market volatilities exacerbated by the US administration's tariff rise, most UAE issuers accessed the dollar DCM mainly through sukuk rather than conventional bonds. There are not yet any Islamic alternatives to the dirham M-Bills, but the CBUAE has started to develop a sustainable Islamic M-Bills programme. The UAE's Islamic banks also have a significant role in the country's financial landscape, with over 17 per cent of total banking system assets at the end of January 2025. 'The Higher Shariah Authority of the CBUAE aims to harmonise and standardise the practices of Islamic financial institutions, and regularly issues regulations and guidelines,' Fitch said.
Al Etihad
12-05-2025
- Business
- Al Etihad
UAE's new Islamic finance strategy to spur growth, strengthen banking infrastructure –Fitch
13 May 2025 01:02 KHALED AL KHAWALDEH (ABU DHABI)The UAE's Islamic finance and halal economy is poised for significant growth following the recent approval of a national strategy aimed at positioning the country as a global leader in Islamic financial services and halal to a new analysis by Fitch Ratings, the UAE's ambitious targets, if achieved, could more than double the value of Islamic banking assets and sukuk issuance over the next six years, solidifying the nation's leadership in these key strategy, approved by the UAE Cabinet on May 6, sets out a vision to expand the Islamic financial ecosystem and boost the export of halal products. Among its headline objectives is increasing Islamic banking assets from Dh986 billion to Dh2.56 trillion by 2031. It also aims to grow local sukuk issuances to Dh660 billion and international sukuk listings in the UAE to Dh395 billion.'The UAE's Islamic finance industry is long established, and it is expected to continue to expand in the short-to-medium term on the back of significant bottom-up and top-down demand and regulatory initiatives to further deepen the Islamic finance ecosystem and infrastructure,' the Fitch report said.'Details of the new strategy are yet to be revealed, and it is yet to be seen what steps the government will take to achieve its targets and what challenges it might face.'According to Fitch, the UAE's Islamic finance sector is already valued at over $285 billion as of the first quarter of 2025. Islamic banks in the country account for more than 17% of total banking system assets, with their annual growth rate outpacing that of conventional banks, according to CBUAE data. The nation also holds a 6.5% share of global sukuk issuance, ranking fourth cautioned, however, that the UAE could face increasing competition from large conventional banks and global sukuk markets. The report said that while the UAE's targets are ambitious and achievable, execution risks remained, including those linked with evolving Sharia compliance requirements and market competition from conventional banks with strong government report also highlighted the UAE's growing dominance in the sukuk market, noting that 92.1% of Fitch-rated UAE sukuk are investment grade, with nearly 40% in the 'A' category. It also noted the increasing diversification of the market with financial institutions accounting for half of all issuers, and the rest spread across corporates, infrastructure projects, and sovereign said sukuk issuance in the UAE reached $6.5 billion in the first four months of 2025, representing a 28% year-on-year increase, compared to a 6.7% rise in conventional Halal IndustryAlongside the financial sector push, the UAE strategy emphasises strengthening its halal production and export capabilities. This includes boosting domestic halal manufacturing to tap into the global Islamic consumer market, which is projected to exceed $3 trillion in the coming years. The UAE aims to build on its reputation as a regional hub for halal products, leveraging its advanced logistics infrastructure and regulatory frameworks to enhance the competitiveness of Emirati-made halal goods on the global stage.
Al Etihad
06-05-2025
- Business
- Al Etihad
UAE Cabinet, chaired by Mohammed bin Rashid, approves the UAE Strategy for Islamic Finance and Halal Industry
6 May 2025 21:06 ABU DHABI (ALETIHAD)His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister of the UAE and Ruler of Dubai, has chaired the UAE Cabinet meeting held at Qasr Al Watan, Abu Dhabi on meeting was attended by His Highness Sheikh Mansour bin Zayed Al Nahyan, Vice President, Deputy Prime Minister, and Chairman of the Presidential Court; His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, Deputy Prime Minister and Minister of Defence; His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister, and Minister of Finance; and His Highness Lieutenant General Sheikh Saif bin Zayed Al Nahyan, Deputy Prime Minister, and Minister of the Highness Sheikh Mohammed bin Rashid Al Maktoum said, "I have chaired a Cabinet meeting at Qasr Al Watan in Abu Dhabi, during which we approved the UAE Strategy for Islamic Finance and Halal Industry. The goal is to develop the Islamic financial sector, lead global Islamic finance activities, and boost the export of Halal products worldwide. We aim to increase the assets of our Islamic banks from Dh986 billion to Dh2.56 trillion within six years, and raise the value of listed Islamic sukuk in the UAE to over Dh660 billion by 2031. We also approved the formation of a committee chaired by the Central Bank governor to implement the strategy. The UAE will continue to diversify and expand its national economy across all sectors."His Highness Sheikh Mohammed bin Rashid added, "We also reviewed, today, the results of the UAE tourism sector for the year 2024. The sector of tourism, travel, and hospitality in the country provided during the year 2023 over 800,000 jobs, and contributed 11.7% to the national economy, and it is expected to score more than Dh236 billion in 2024. We have the necessary infrastructure, and our goal is to raise the sector's contribution to Dh450 billion over the next six years."His Highness Sheikh Mohammed bin Rashid confirmed, "The Cabinet also approved, today, an updated national biosafety framework to enhance our national capabilities in prevention and response, increase research and innovation efforts, strengthen our biological emergency management system, and reinforce the UAE's biosafety infrastructure."His Highness Sheikh Mohammed bin Rashid concluded, "We also reviewed updates on the small and medium enterprises (SMEs) sector. The UAE ranked first globally for the fourth consecutive year in the International Business Leadership Observatory report of 2024–2025, and 18th among the world's top 100 in the Emerging Ecosystems Ranking in 2024. SMEs licenses have grown by 160%. Our aim is to continue supporting and expanding this sector, providing the best environment for launching and sustaining small and emerging businesses, which are a core pillar of our national economy."During the meeting, the UAE Cabinet approved the UAE Strategy for Islamic Finance and Halal Industry, aiming to build a globally competitive national Islamic finance sector, facilitate its activities, and drive leadership in sustainable finance. It also seeks to boost exports by increasing local halal production and reach global Islamic markets. By 2031, the strategy targets significant growth, aiming to increase local Islamic bank assets to Dh2.56 Trillion, increase local Sukuk issuances to Dh660 billion, and international Sukuk listed in the UAE to Dh395 billion, among other the Cabinet approved an updated, second edition of the National Biosecurity Framework (2023-2032), focusing on three main aspects: sustainably managing biological risks, strengthening prevention and response capabilities, and promoting biosecurity research and innovation. Key updates include developing a biological emergency management system, implementing relevant international agreements, and bolstering national expertise. The UAE Cabinet reviewed the performance of the Emirates Tourism Council and the positive results of the tourism sector, driven by initiatives like the 'World's Coolest Winter' campaign and the National Tourism year 2024 tourism results revealed that 30 million guests checked in to the country's hotels by end of the year, scoring an increase of 9.5% compared to the previous year, room numbers grew by 3% to 215,000, and hotel revenues rose by 4% to Dh37 billion. Tourism, including travel and hospitality, contributed Dh220 billion (11.7%) to the 2023 national economy, and provided over 800,000 jobs. Its contribution is projected to reach Dh236 billion in the UAE's commitment to sustainable development and its National Policy on Biofuels, the UAE Cabinet reviewed several biofuel projects. As part of the UAE's commitment to providing excellent services to the community members, the Cabinet reviewed preparations for the 2025 Hajj season, led by the UAE Hajj affairs department, which operates under the General Authority of Islamic Affairs and Endowments and Zakat, and in partnership with local governments boost federal employee productivity and efficiency, the UAE Cabinet approved the updated performance management system for Federal Government employees (Enjazaty). Focusing on strategic alignment, specialisation, employees' roles, results, the system promotes a culture of high performance, continuous feedback, and learning, while emphasising flexibility, transparency, and a strong employer-employee legislative affairs, the Cabinet further approved the issuance of legislative decisions concerning visiting doctors at federal health facilities, regulating space activities, penalties related to nuclear regulation and public benefit organisations, as well as amendments to Cabinet's resolution on marriage Cabinet also reviewed the Ministry of Human Resources and Emiratisation's (MOHRE) AI implementation results. These included an AI-driven labour market simulation model, and an online platform that facilitates analysis to support decision-making and AI-driven solutions to current challenges. Automated solutions mimicking human actions in digital systems were also Cabinet reviewed the latest updates on the national Small and Medium Enterprises (SMEs) sector. The UAE ranked first globally for the fourth consecutive year according to the 2024-2025 report of the International Business Leadership Observatory, seventh globally on the 2024 Global Competitiveness Index, and 18th globally among the 2024 top 100 Emerging Ecosystems Ranking. The country witnessed a growth of more than 160% in the number of SMEs licenses issued between 2020 and 2024. Additionally, it reviewed the performance results of UAE Council for Digital Wellbeing, combined with national efforts to combat harmful online and social media practices, such as blocking drug-related content and accounts, disrupting malware and phishing schemes, and banning over eight million phone numbers linked to harmful products. Performance reports for 2024 were reviewed for numerous federal entities, including the UAE Space Agency, Emirates Drug Establishment, the Federal Authority for Nuclear Regulation, among Cabinet also addressed requests from the Federal National Council to discuss policies concerning public benefit organisations, support for national companies, consumer protection, and traffic safety agenda of the meeting featured the Cabinet's approval of the restructuring of the UAE Gender Balance Council, chaired by Her Highness Sheikha Manal bint Mohammed bin Rashid Al Maktoum, and including Mona Ghanem Al Marri, Vice Chairperson, and other members. The Cabinet also approved the issuance of a resolution restructuring the UAE Gender Balance Council, enabling it to carry out its duties, and achieve its objectives in coordination with relevant federal and local entities and the private meeting witnessed also the Cabinet's approval to restructuring of the UAE Council for Environmental and Municipal Work, chaired by Amna bint Abdullah Al Dahak Al Shamsi, UAE Minister of Climate Change and Environment, and to the formation of a special committee for chemical precursors, chaired by the Emirates Drug Establishment. The UAE Cabinet ratified four international agreements, focusing on investment promotion and protection, with the Democratic Republic of Congo, Uzbekistan, Somalia, and the Cabinet also approved numerous MoUs and agreements, including a comprehensive economic partnership with Azerbaijan, and an agreement between the Arab Youth Center and Jordan's Crown Prince Foundation. Further approved MoUs addressed mutual recognition of competency certificates with Fiji, energy cooperation with Mongolia and Uzbekistan, and visa exemption with Sri Lanka. In international affairs, the Cabinet approved hosting eight world class events, including the Intergovernmental Oceanographic Commission (IOC) regional committee meeting for the Central Indian Ocean, the World Customs Organization Technology Conference and Exhibition, and the International Operational Risk Working Group Conference.
