News Column

Sukuks expected to play important role over next decade: Dubai Chamber

September 2, 2014



DUBAI, 2nd September, 2014 (WAM) -- The global Sukuk industry is expected to be one of the fastest growing segments of the Islamic finance industry with huge growth potential in the Gulf Cooperation Council, GCC, region, particularly in Dubai where Sukuks are expected to play an important role over the next decade in securing funds for the substantial line-up of new projects, the Dubai Chamber of Commerce and Industry has said in a report.

The observations in the report, based on U.K. Islamic Finance Secretariat (UKIFS) and Malaysia International Islamic Financial Centre (MIFC) data, are important in view of the 10th World Islamic Economy Forum which will be organised in Dubai from 28th-30th October by Dubai Chamber and the WIEF Foundation.

"Islamic economy has become increasingly relevant in the modern world, offering new hopes of revival for the fragile global economy. The 10th World Islamic Economy Forum in Dubai will put the spotlight on the massive opportunities available in various segments of this growing sector," said Abdul Rahman Saif Al Ghurair, Chairman of Dubai Chamber.

"The Dubai Chamber research note highlights the Sukuk market as one of the most attractive areas of Islamic finance that has attracted considerable interest from the business community worldwide. In addition, the Sukuk market has remarkable growth avenues that can be effectively tapped to support the growing investment requirements in various sectors," Al Ghurair added.

While the GCC and Malaysia have emerged as the main hubs for Sukuk issuance, the main issuers of the Sukuk in the global market are sovereigns, followed by corporates and government related enterprises. Countries such as Tunisia, Mauritania, Senegal and Oman are set to be key markets for Sukuks, Dubai Chamber observes in the research note.

However, Sukuk issuance is not limited to Islamic countries. In 2014, a number of high profile debut sovereign issuances are expected to take place in countries such as the U.K., Ireland, and South Africa. It is further anticipated that sovereign issuances by the U.K. are likely to spur interest in Europe for sovereign Sukuks as they provide access to the growing Islamic liquidity pool, the report says.

According to the Dubai Chamber research note, global financial assets are dominated by Islamic banking assets, which accounted for about 80 percent of the total assets in 2013 while Sukuks made up just 15 percent of the market. However, the good news is that Sukuk bond issuance has significantly grown over the last decade. The Dubai Chamber report, citing data from Rasameel Structural Finance, shows that the issue of Sukuk bonds has registered cumulative annual growth rate of about 47 percent over the period 2001-13.


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Source: Emirates News Agency (WAM) (United Arab Emirates)


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