Kuwait Finance House (KFH) CEO Mohammed Al-Omar asserted that the GCC countries have a great opportunity to take advantage of the growth and development of Islamic banking that has become a pivotal sector of the global economy; he applauded the UAE for turning Dubai into an international centre for Islamic banking.
Al-Omar, who took part in the Global Islamic Economy Summit that was held in Dubai on November 25th and 26th under the auspices and presence of Prime Minister the Governor of Dubai His Highness Sheikh Mohammed Bin Rashed, said that Kuwait and the UAE witnessed the birth of two Islamic banking giants 35 years ago, which are KFH and Dubai Islamic Bank (DIB).
He added that this industry grew in the gulf region by the establishment of new Islamic banks and other numerous corporations that now operate in many countries worldwide. He went on to say that Islamic finance industry is rapidly progressing, where the total assets is expected to reach USD 1.8 trillion by the end of 2013, which is 12.5 per cent y-o-y, compared to USD 1.6 trillion in 2012. Market indicators show that this industry will push past the USD 6.5 trillion barrier by 2020.
Moreover, Al-Omar stated that Islamic financing witnesses rapid expansion in the world financial system, where there are 600 Islamic financial institutions in 75 countries. He explained that this economic model is highly demanded because Islamic banking focuses on real economy; thus leading to the development and prosperity of societies.
Furthermore, he noted that Islamic banking can play a prominent role in providing financial sources and in participating in mega projects that are targeted by the Middle East region. He revealed that contracts worth USD 225.8 billion will be granted up until the second half of next year. The biggest 100 projects in the Middle East include Saudi Arabia with USD 74.5 billion, Iran USD 69 billion, UAE 48.5 billion, followed by Qatar. This shows that three GCC countries rank top three in volume of projects in the region. He stressed that Islamic banking can fund those projects in collaboration with regional and international banks; especially after KFH laid the legitimate and legal foundation to combine conventional and Islamic financing in one project, such as the Equate project for petrochemicals in Kuwait.
Al-Omar underlined the importance of Sukuk as a financing instrument that meet the requirements of companies and governments, since Sukuk are the Islamic counterpart of bonds. He remarked that Sukuk has been enlisted in many global markets and has received a credit rating, which encouraged many countries in Europe, east Asia, and the Middle East to use Sukuk to fund projects. He mentioned that KFH took part in arranging and issuing Sukuk worth USD 5 billion in sovereign Sukuk for western governments, and other Sukuk for major corporations worldwide.
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