Size of Islamic economy in Dubai at Dh33b
Middle East institutions to play big role in China project financing
Emirate contributed 8.3% to its GDP in 2016 against 7.6% in 2014, a growth rate of 14%, Economy minister summit
China’s Belt and Road Initiative (BRI) involving massive investments spanning 65 countries that comprise 63 per cent of the world’s population and 29 per cent of global GDP is expected to boost the prospects of Islamic finance, according to an experts speaking at a panel at the Global Islamic Economy Summit.
The purpose of the BRI project is to link up countries in trade that involves movement of people, money and material across the borders and total infrastructure investments are estimated to exceed $8 trillion (Dh29.6 trillion).
BRI is expected to result in manifold growth in trade between China and the MENA region and massive scale infrastructure development across wider region covering central Asia. The trade between China and the UAE is growing rapidly. Last year trade grew by about 15 per cent to more than $33 billion.
“Trade and investment growth from BRI through the UAE is likely to open up huge opportunities for local and regional Islamic financial institutions. These institutions will be key players in catalysing mobilisation of funds of these projects,” said Dr Adnan Chilwan, Group CEO of Dubai Islamic Bank.
The UAE, already a major hub of the trade corridor between China and the Middle East, Africa, Europe and beyond is expected to attract significantly larger volumes of trade transiting through the UAE.
The financing needs of project linked to BRI across various countries and jurisdictions are expected to be in several trillion dollars.
“The requirement is so huge that no one country or a few institutions can meet the financing requirements. This clearly gives opportunity for local, regional and global institutions to join in the financing efforts,” said Professor Nabeel Baydoun, Vice-Chancellor for Academic Affairs at Hamdan Bin Mohammad Smart University Dubai.
BRI in the Middle East region involves 13 countries and the cooperation between China and Arab region would focus on energy, core infrastructure trade and investment.
As the Middle East adjusts to a lower oil price environment, governments in the region are speeding up both structural and fiscal reforms leading to opening up domestic markets to attract foreign investment across infrastructure, trade, investment, services and supplychain.