Regulating the Islamic economy
The UAE’s Higher Sharia Authority will play a big part in the future, writes Abdulla Mohammed Al Awar, CEO of Dubai Islamic Economy Development Centre.
The primary goal of the Dubai: Capital of Islamic Economy initiative that was launched in 2013 is to build an economy with a sound and well-defined infrastructure along with a unified local and regional regulatory framework that serves as a basis for establishing an international benchmark.
The need of the hour is to unite various segments of society in the conviction that Islamic economy is a sustainable solution to the issues witnessed across the globe, caused by reckless economic strategies that do not take development imperatives into account and lose sight of the human aspect amidst the expansion process.
We have come a long way in this regard: we have identified the goals of Islamic economy, the factors of sustainable growth, and the legality of circulating money and employing it in the real economy. Our latest cultural and scientific mission is to produce the most appropriate instruments to achieve our objectives.
After the UAE Cabinet announced the establishment of the Higher Sharia Authority that will oversee the financial and banking sector, we are closer than ever to attaining our goals. Since the biggest challenge facing Islamic finance is the implementation of uniform standards to regulate transactions, this decision represents a groundbreaking step.
The UAE Cabinet, during the same session, also launched the Cohesive Families 2021 campaign. Built around the premise that the nature of a country’s economy defines the nature of its society, the initiative aims to develop a close-knit society with economic and social roles based on balanced and reciprocal relationships of care and inclusion.
Building a strong economy with a firm legislative and regulatory infrastructure always starts from top and rests upon defining the competences of the supreme authority in line with the trends, people’s needs and aspirations as well as the development imperatives. This is the characteristic of true leadership as defined by modern economic and social sciences.
When we talk about regulating Islamic economy, we mean implementing a framework to integrate its sectors and guide them towards development so that they can contribute to raising the GDP and to the competitiveness of the national economy. We do not mean isolating Islamic economy from the overall economic environment.
The Higher Sharia Authority will conduct its activities in the context of the national economy ecosystem, maintaining strong relations with the conventional sectors. The objective is to spread the positive impact of the responsible practises adopted by the financial institutions that embrace the Islamic economy culture - a culture whose foundations stem from elementary historical theories that consider humans and society at large as natural products of economic infrastructure. This is what correlation between regulated Islamic economy and stable national economy means.
Regulating Islamic economy in its capital, Dubai, that embraces and supports the initiative, will have significant impact on the UAE’s market competitiveness and investment attractiveness. I strongly believe setting up the Higher Sharia Authority will enable us to achieve a more stable and sustainable economy as well as instil the Islamic economy culture in institutions and individuals. When the legislation is clear and the standards harmonised, they will become inherent in the daily economic practises.
By nature, people are wary of the ambiguous, especially when it comes to the fate of their money. The presence of legal authorities overseeing banking and finance institutions that report to a higher regulatory body will direct the flow of private and public wealth towards the development of a real economy, towards production and manufacturing, and ultimately towards enhancing the national economy base and diversity.
Furthermore, the unified Shari'ah framework will assist in defining the priorities in accordance with people’s basic needs and protect wealth from risk. At the same time, it will help the sector to overcome challenges not only where investments and wealth utilisation are concerned, but also when it comes to Islamic financial services, such as Takaful, and projects based on partnerships between society and institutions.
Another benefit that will result from the formation of the Higher Sharia Authority lies in the model it will present to the world that will eventually speed up the implementation of similar steps in other countries. We can achieve this as long as we share our experience and communicate it to others at regional and global events.
Regulating Islamic economy - or any other economy - needs to nurture a culture of responsibility, a culture based on science and jurisprudence, which embraces the latest developments, inspires new rules and regulations, and is compatible with the factors that drive economic growth. After all, if the structure of the economy is the body that conducts business, the culture of Islamic economy is undoubtedly the spirit of this body.