Islamic trade finance is predicted to become the preferred investment choice by emerging rapid growth markets in the next decade as companies look for serious alternatives to traditional channels, a study by Ernst & Young reveals.
According to the firm's Global Islamic Banking Centre, RGMs such as Turkey, Indonesia, Qatar, Malaysia, Saudi Arabia and the UAE are fast becoming a significant driver of the global economy.
"Trade will grow between these markets, with predominantly Islamic Middle Eastern countries trading increasingly with other RGMs. Banking, insurance and other financial sectors will grow as the economies mature and wealth levels rise," said Gordon Bennie, financial services industry leader for the Middle East and North Africa (MENA) at Ernst & Young.
The firm said that in order to compete effectively, Islamic institutions should align their trade finance operations with global common practises and that businesses should have a clear understanding of how Islamic institutions can add value to them. Talent management is also an integral part of the strategy, as there is a shortage of staff with extensive experience in Islamic markets.
It can be recalled that during the 2008 global financial crisis, Islamic financial institutions and investments were relatively unscathed because of their zero exposure to interest rates. Asian countries hold around 13 per cent of global Islamic banking assets -- the highest outside of the Middle East.
(Wealth Briefing / 07 Jun 2013)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com