Dubai As Hub Of Islamic Banking

13 Feb 2013

The small emirate of Dubai that thrives on duty-free shopping has given notice to Saudi Arabia and other leading Islamic nations that it is henceforth the Mecca in terms of economics. The success of Dubai's customer-friendly Islamic bank has given it the big idea of positioning itself as the hub of Islamic banking. But to achieve it, economists believe that Dubai would have to go for the intricacies part by part rather than go the whole hog.

Grand plans are already afoot to clinch the vital part of reclaiming sukuk industry as an Arabian Gulf-centered business. Dubai now has the best chance of becoming the leading market for the issue and trading in sukuk and other fixed income securities not only in the region but the world at large. Traditionally, the sukuk (Islamic) business has been confined to the unlikely place of London and Malaysia, which has its own plans of playing a leading part in Islamic banking. Dubai, however, has already dethroned London and now it may have to attract the market away from Malaysia as well.

London has monopolized the Sukuk business because of its tradition of running markets cleanly and has netted about $27b on that account. Since Dubai is aiming big for sukuk business, it has already crossed the London gross. Malaysia is close behind with $25b. Those in the know say that despite all the oil money, both Saudi Arabia and the Gulf cannot boast of more than $10b sukuk business.