Minister of Economy Abdullah bin Touq Al Marri confirmed that the UAE, thanks to the guidance of its wise leadership, remains a major center for Islamic finance in the world, as Islamic banking has become an integral part of the financial industry in the country thanks to the regulatory environment that balances legal requirements and the provisions of Islamic Sharia.
He said in his opening speech today during the conference “Developments in Codification in Islamic Finance” – the experience of the legislator in the United Arab Emirates as a model, “The UAE has been ranked among the best three Islamic economies, according to the Global Islamic Economy Index, for the third year in a row, and the country has also ranked fourth globally as one of The largest Islamic financial markets by assets, according to the 2023 Islamic Finance Index report.
He praised the role of the International Islamic Center for Conciliation and Arbitration in organizing this conference, which represents a vital platform for discussing legislative and technical developments related to Islamic finance, which contributes to enhancing the financial community’s awareness of its regulatory frameworks and its importance at the local, regional and international levels.
The Minister of Economy added during the conference, “In 2022, Islamic finance constituted 23% of the total assets of the banking sector in the country, equivalent to 845 billion dirhams, and in the first half of 2024, the percentage rose to 29%, achieving a growth of 5.7%, which is A higher rate than the growth of major traditional banks of 5.4%.
He pointed to the Fitch Credit Rating Agency, which expects Islamic banks to continue to grow at a faster pace than conventional banks in the medium term.
He continued: “The Islamic sukuk market witnessed a noticeable expansion in the Emirates, as the federal government recently issued Islamic treasury sukuks in dirhams, which constitutes an incentive for other entities in the sector. Sustainable financing has also witnessed rapid growth in the country since the issuance of the first green sukuks in 2019, whether through… Islamic capital markets or Islamic finance, adding that sukuk issuances compatible with environmental, social and corporate governance principles in the UAE amounted to 15% of the total global sukuk.
He pointed out that a study conducted by the Central Bank of the Emirates on the Islamic banking sector in the country, which included local and foreign Islamic banks as well as traditional banks that provide Islamic services, said that 79% of Islamic banks in the country adopted a sustainability strategy, while 74% of them reported that their strategy was based on… Board of Directors level. All Islamic banks have confirmed that they have sustainability strategies, while some strategies of traditional banks that have Islamic banking windows are under development or awaiting approval.
His Excellency stressed the UAE’s firm commitment to developing economic policies and legislation aimed at strengthening Islamic finance and the Islamic economy in general, as part of the ongoing national efforts to enhance the growth and sustainability of the national economy, and to make the UAE a global center for the Islamic economy.
Bin Touq pointed out that the Ministry of Economy worked in cooperation with its partners to prepare and develop Federal Decree Law No. 50 of 2022 regarding commercial transactions, which contributed to strengthening the private sector for Islamic financial and banking transactions in the UAE economy.
He stated that the law is considered an essential legal foundation for Islamic banking institutions, as it promotes the development of Islamic banking growth, supports Islamic banking institutions and entities, stimulates the flow of investments, and provides greater space for growth and competition in commercial transactions. It also requires banks to provide adequate guarantees and insurance against loans, which enhances financial stability.
He also pointed out that the law regulates contractual relations, supports the stability of transactions, and protects customers, while providing comprehensive legislative oversight instead of relying only on fatwas and rulings issued by specialized bodies.
He explained that the law supports commercial transactions such as deposits for investment accounts, Takaful insurance, and others, in accordance with the provisions of Islamic Sharia, and also sets special provisions for certain types of contracts and obligations, including contract promises, installment sales, Murabaha, Istisna’a financing, Salam, and leasing.
He stressed that the law constitutes a radical shift in building an advanced legislative framework for the Islamic financial system in the UAE economy, which enhances the attractiveness and competitiveness of Islamic banking services.
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