Jeddah, MINA – The Islamic Research and Training Institute (IRTI) of the Islamic Development Bank (IsDB) Group released on Thursday the Kingdom of Saudi Arabia Islamic Finance Country Report, the first detailed study of its kind covering the Islamic finance sector in the Kingdom.
Under the theme “Islamic Finance in Saudi Arabia: Leading the Way to Vision 2030”, the report analyses the outlook, trends, and prospects of Islamic finance in the Kingdom.
According to the report, by the end of 2018, Islamic finance assets in Saudi Arabia reached a remarkable US$ 879.2 billion (SAR 3,297 billion), making the Kingdom the largest Islamic finance market globally in economies with dual financial systems comprising both conventional and Islamic financial sectors.
In a press release, the report finds that Islamic finance has a promising future in Saudi Arabia, especially considering the country’s position in the global landscape.
With its vast natural and human resources, a unique position as a religious tourism center, an advanced and resilient financial system, and a visionary leadership, the Kingdom has the necessary ingredients to tap into the immense value that Islamic finance can bring to economic progress and social prosperity.
In his foreword to the report, H.E. Dr. Bandar M.H. Hajjar, the President of the IsDB Group, stated, “Saudi Arabia is unquestionably a major hub of the Islamic financial industry not only in the Middle East but also worldwide. With the Vision 2030 and an energetic and innovative youth population, Saudi Arabia has a great potential to lead the industry in the 21st century. Not surprisingly, Islamic finance is one of the key pillars of the financial sector development program set out by the Government of Saudi Arabia”.
According to the report, the banking sector will continue to play a vital role in the implementation of the Vision 2030 to achieve sustainable development and a flourishing economy for the Kingdom.
The report further highlights the Kingdom’s actions in the area of digital transformation, evidenced by the formation of “Fintech Saudi” to act as a catalyst to develop the fintech ecosystem alongside the vibrant regulatory sandbox set out by the monetary authority.
In his comments on the release of the report, Acting Director General of IRTI, Dr. Sami Al-Suwailem, said, “the Kingdom is endowed with a unique set of advantages and has the potential to lead the Islamic finance industry at the global level. We hope that this report contributes to the progress of the industry to fulfil the Vision of 2030.”
On the aspect of social and development finance, the Kingdom has introduced two breakthrough initiatives to position the sector in a more profound role. These are the revamp of the social finance sector (including zakāh, awqāf and philanthropies) and the formation of the National Development Fund, both aiming to support the policy initiatives of diversifying resources and creating job opportunities.
Given the Kingdom’s immense potentials and its unique comparative advantages, Saudi Arabia could become a global leader in the Islamic financial services industry particularly by capitalizing on its distinctiveness in two areas:
- Awqāf (Islamic endowments): As a spiritual destination for Muslims worldwide, the Kingdom offers favourable incentives and can benefit from sizeable opportunities in terms of investment and spending. Awqāf can be an ideal channel for investment as awqāf require sustainable income generation.
- Small and Medium Enterprises (SMEs): Mobilizing resources for the SMEs through ṣukūk, equity, crowdfunding, venture capital, inter alia, would provide Islamic finance industry an edge in innovation, diversity and economic impact. Since SMEs are the engine of job creation, investing in the SMEs sector is essential for sustainable economic growth.
The new report is part of a series of Islamic Finance Country Reports initiated in 2013 to provide analyses on the Islamic financial outlook of countries for the benefit of prospective investors and other stakeholders. IRTI, along with partners, has issued so far 11 such reports.
About the Islamic Research and Training Institute (IRTI)
The Islamic Research and Training Institute (IRTI) is a Member of the Islamic Development Bank (IsDB) Group dedicated to knowledge creation and dissemination in Islamic Economics and Finance.
With a track record of nearly four decades of delivering cutting-edge research and capacity development programs, IRTI works to develop innovative knowledge-based solutions and enhance human capacity in Islamic Economics and Finance for the sustainable development of IsDB Member Countries and Muslim communities in non-member countries worldwide.(R/R1/RE1)
Mi’raj News Agency (MINA)