Good news for Islamic finance in the UAE

Mian Muhammad Nazir

The United Arab Emirates, particularly Dubai, has always been amongst the few most comfortable places for Islamic finance. It has received significant support from the Government, regulators and stakeholders. Yet despite the popularity of Islamic finance in the UAE, and UAE's contribution in the growth of Islamic finance, the legal and regulatory infrastructure has always needed further improvement in order to keep pace with the challenges of time and to further strengthen the confidence of the stakeholders in the Islamic finance industry. As expected, the latest initiatives of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, the Prime Minister and Vice President of the UAE and ruler of Dubai, have once again offered a remarkable degree of comfort to the industry. The initiatives will lead the UAE, and particularly Dubai, through a series of practical steps, which will pave the way for the growth of Islamic finance on a solid foundation.

The proposed initiatives will entail industry specific and robust legal, judicial and regulatory reforms, which will provide a level playing field for the Islamic finance industry, to which it has been aspiring since its inception. What Islamic finance industry would certainly welcome is the review of Federal Law number 6 of 1985 regarding Islamic banks, financial institutions and investment companies.

The review of Islamic banking law will allow the integration of Islamic finance into the mainstream financial system. In addition, it will ensure the compatibility of Islamic finance products and services with local laws, and the enforceability of Islamic finance structures, contracts and instruments.

Other areas that deserve urgent attention are: (i) adopting a uniform set of standards for Islamic finance products and services; (ii) corporate governance structure; (iii) accounting and auditing standards; and (iv) steps towards integrating Islamic economics and finance into the national curriculum, to ensure the availability of qualified and trained professionals to lead the industry on a regional and global level.

Considering the UAE's very successful history in achieving some landmark projects, and its well-deserved position as an innovative and business-friendly country, the Islamic finance industry is confident that after receiving the attention of His Highness, it will have a promising future.

Mian Muhammad Nazir

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