Bismillah AlRahman AlRaheem
Before I begin, may I ask for a round of applause for the speech that Prime Minister AbdulRazak gave about Women’s empowerment.
Although it has no relation to the subject that I will speak about, it is my firm belief that the foundation of any democratic society is a democratic household and the threshold to that is an empowered and equally productive environment for all genders, so thank you Sir that was very brave and very appropriate.
Your Majesty, your highness, your excellencies, ladies and gentlemen, it is an honour to be addressing you today at this important conference to explore the future of Islamic Finance and Economy.
It is significant that this is the first occasion that this event has taken place outside of the Muslim world. And it is significant that it is being held here, in London.
London is a cornerstone of the global financial system. As Asia finishes its day, London starts and it passes the baton west at the close of its day. It is a city renowned the world over as a centre for trade and for a unique openness and international outlook.
I would like to thank His Excellency Prime Minister Cameron and His Excellency Prime Minister Najib Abdul Razak for hosting this conference, the Honorable Baroness Warsi for so effectively promoting this event, and to congratulate the Honorable Musa Hitam, Chairman of the WIEF on the growth of this event to what it is today.
All of us gathered here understand the absolute, fundamental importance of economic development, which this forum helps enhance. Economic development thrives through interdependence. Growth in one country, brings growth to others. It is a virtuous cycle.
This year’s forum looks at our ‘changing world’ and ‘new relationships’. It speaks very firmly to my personal agenda and that of my country. While we in the Middle East we are not the entirety of the Islamic World, undoubtedly, the world’s focus has been on our political developments.But the driver, the catalyst and, ultimately, the solution to our region’s issues, lies as much in economic development, in enhanced opportunity, and in education. Through these there is the opportunity of delivering lasting, transformative change and prosperity across class, religionsect, tribe and race.
By accepted estimates, in the Arab world over 100 million jobs must be created in order to meet the population swell the region currently faces from one of the fastest growing youth populations in the world.
This is an issue Bahrain recognised over 40 years ago, introducing a raft of programs aimed squarely at diversifying our economy and investing in education and skills development. It is a programme I am passionate about and which I will continue to drive and evolve to meet the challenges of this generation.
A major aspect of the work that has been undertaken in Bahrain has been around the development of industries that act as net multipliers within the economy.
This work centres on the recognition that the private sector has a pivotal role to play as the engine of growth and productivity. And, that investment in people is as important as investment in infrastructure.
Strong financial institutions and regulatory frameworks form a central element in this approach and these, in and of themselves, help drive job creation – something London knows very well.
Our longstanding strength in financial services – has served to benefit the growth of many other sectors as well.
It has helped facilitate private sector funding for large scale government infrastructure projects, in housing and transport. It has also resulted in private investment in high-productivity sectors, such as manufacturing, petrochemicals, tourism and real estate. All of which has helped create jobs and boost economic growth.
As Bahrain sits at the heart of the rapidly growing GCC market-The Gulf Cooperation Council- valued at over $1.5 trillion today, the Kingdom’s financial sector has also played a role in fulfilling the funding needs of the wider region. And today, with the growth of Islamic finance, we proudly host the largest concentration of Islamic financial institutions in the region.
Islamic finance has grown rapidly in recent years and, as a whole, it is now valued, according to some estimates, in excess of $1.2 trillion globally. This growth has, primarily, been supported by three factors:
Firstly, and naturally, this has occurred through the continued and fast growth in many of the economies of the Islamic world, home to 1.5 billion Muslims.
Secondly, it has been supported by international investors looking to gain access to these markets.
And, thirdly, from observable growth coming from non-Muslim investors looking for what has become known as ethical investment products that adopt the principles which underpin this area of finance.
With such potential and opportunity on offer, there are now challenges to meet in order for the scale of demand to be matched, while ensuring that the religious foundation on which it is built, and from which it gains its strength, is preserved.
Ultimately, there is a need to bolster and standardise the regulation of the industry as it develops. This means ensuring a universality of application, to keep the industry attractive, reliable and trusted, and able to meet the ever-growing demand.
The industry could also benefit from new asset classes, like private equity, infrastructure and liquidity products, while supply of some products, such as sukuk – which still do not match demand, are increased.
Importantly, to help facilitate this growth, we must also empower and elevate those organisations that already exist to apply regulation and enshrine accepted standards.
We have organisations, like this one like AAOFI and others, capable of aiding the
industry’s development by protecting its fundamental attribute – the ability to deploy capital for Muslim and non-Muslim investors in a Shariah compliant fashion.
By ensuring these organisations retain full independence, while strengthening their ability to operate, we can ensure the industry has the scalability to meet the growing demand, and this is very important here, while protecting the spiritual and ethical mandate that gives it its fundamental acceptance among the consumer and maintains its integrity.This is key.
With this in mind, Bahrain, as host to a number of organisations committed to the industry’s development, is absolutely committed to working with our fellow pioneer, Malaysia, as well as with emerging hubs, such as London, to aid Islamic Finance’s growth. And in that spirit, I would like to invite you all to Bahrain at some time in the future to hold another meeting, so that we can further this good work.
Through greater cooperation, trade and the exchange of ideas, markets can be explored, opportunities developed and, ultimately, jobs created, helped by key multilateral events like this. And, Islamic finance serves as a key example of the potential and opportunity we have in our grasp. It is one we cannot afford to lose.
In conclusion, I would like to thank you for your time. I look forward to hearing and absorbing all of your valuable contributions that will be made over the days ahead.
Thank you very much
Salamu Alaikum Warahmatu Allahi Wabarakatuh