The United Arab Emirates (UAE) has always provided an attractive environment from which to provide Islamic finance services and products into the Gulf Cooperation Council (GCC) and beyond. In addition to being an established and vibrant global financial centre and having its geographical location in the centre of the Asian and Western financial markets, the UAE also provides a legal system and a judiciary that is familiar with the principles of shariah. This chapter provides an in-depth analysis of everything you need to know about the Islamic finance and markets in the UAE.
There is no doubt that Sukuk continue to be the star performer of the Islamic finance industry, and are regularly deployed for an array of transactions including infrastructure development, Basel III liquidity requirements and even social welfare funding. However, other Islamic structured products have simply not attracted a similar level of interest in the UAE, despite the obvious advantages these products offer to companies looking to manage risk exposure (particularly in the context of trade finance, where plain vanilla hedging instruments may not be
sufficient) and to sophisticated investors looking to customize their investment portfolio to meet specific risk return objectives. Rahat Dar asks; why haven’t these Islamic structured products found a ready market in the UAE?
Over 30 years of heavy investment in infrastructure development has seen the emirate of Dubai transformed from an under-developed backwater into a hub for project finance which is often cited as the poster child for the type of metropolis that can be created through dedicated infrastructure investment. With the growing appetite for public private partnerships (PPPs) in the UAE, Rahat Dar analyzes the role Islamic finance will play in this new era.
As with other countries in the heavily oil-dependent Gulf region, the UAE has taken active steps in recent years to expand its revenue streams (including the implementation of value-added tax, effective the 1st January 2018). Afterall, relying on treasury reserves, albeit substantial, to plug spending gaps in the national budget was only going to be a short-term solution to the long-term problem of low oil prices.
While it is now abundantly clear that the Sukuk market has failed to realize the predicted surge in sovereign Sukuk issuances following the drop in the prices of oil in 2014, when it was assumed that oil revenue-dependent GCC
countries would rush to the Sukuk market in order to fill shortfalls in their spending budgets, the current Sukuk market still presents a mixed picture. Against the backdrop of the current uncertainty in the Sukuk market, Rahat Dar looks at some of the likely drivers, challenges, and prospects for UAE Islamic banks looking to issue Sukuk in 2017 and beyond.
On the 30th April 2014, a group of leading industry experts gathered at the Dubai International Financial Center (DIFC) to discuss the strategy and prospects for Dubai to drive its ambitions as a global capital of the Islamic economy.
Bashir Ahmed discusses key issues and trends in relation to the restructuring under Islamic Finance in the UAE.
Masood Afridi, partner at Afridi & Angell, compares Islamic and conventional project financing and explains why careful documentation is so important.