Dammam, Asharq
Al-Awsat—The global Islamic economy is growing faster now than at
any time previously, attracting increasing investment from around the world,
according to the chief executive of a company operating in the sector.
Nader Sabri,
chief executive of Muslim lifestyle products manufacturer TIMEZ5, told Asharq
Al-Awsat the sector—which includes segments such as Islamic
finance and halal food products, as well as the collective economic output of
Muslim countries—was “growing faster than at any time before” and had “become
very attractive for international investors,” a large portion of whom were not
Islamic or based in Muslim-majority countries.
“There are
two types of company [operating in this sector],” Sabri said. “The first
comprises those who are entering Islamic markets from the outside. These are
mostly non-Islamic companies whose interest in Islamic markets is part of a
[wider] strategy for entering emerging markets.”
“The second
type are those who look [for opportunities] in Islamic markets from the inside,
[looking then to venture] outside [Islamic countries]. These are usually
companies managed by Muslims or with a focus on this [Islamic] market,” he
continued.
“The first
type seeks to create opportunities and to capitalize on Islamic markets as they
would in any other market. These companies are not driven by Islamic values but
will adhere to them [in their activities] in order to reach these markets,” he
said.
“The second
type of company, meanwhile, adopts Islamic values as part of its raison d’être
and applies quality standards and . . . innovation in Islamic
markets.”
Speaking of
Gulf contribution to the overall Islamic economy, Sabri said that “50 percent
of the market’s total revenues” came from Gulf countries, adding that 87
percent of Gulf revenues came from non-Gulf consumers who purchased such
products while visiting the region, especially during the pilgrimage season
when the Muslim holy cities of Mecca and Medina in Saudi Arabia are crowded
with pilgrims who often purchase products to give as gifts to family members
back home.
But Islamic
products also have appeal in non-Islamic countries due to the estimated 300
million Muslims living there, Sabri said, adding this showed there was “a need
for more products . . . for Muslims living in foreign
[non-Islamic] countries.”
The global
Islamic economy includes all sectors driven by the global Muslim population’s
adherence to any kind of faith-based activity, with products or services
created to cater for such activities. These include Islamic finance, where
consumers can obtain loans, mortgages, insurance policies or investment
products all adhering to Islamic Shari’a law by avoiding the need to make money
via interest. It also includes the global halal food market, which follows
Islamic prescriptions on animal slaughter, as well as the tourism, cosmetics,
pharmaceutical, media, leisure, and lifestyle segments.
“The
lifestyle products segment is currently one of the fastest-growing in the
global Islamic market, after years of being on the margins due to the
domination of the market by Islamic finance and halal food products,” Sabri
said.
A recent
Thomson Reuters report estimated the total size of the halal food and Islamic
lifestyle products segments at 1.62 trillion US dollars, expecting it to grow
to 2.47 trillion dollars by 2018.
The global
Islamic economy also encompasses the economies of Islamic countries around the
world—estimated at 8 trillion US dollars in total size—which together hold a
1.6 billion population currently growing at twice the rate of the global
population.
Sabri added:
“Historically, investment in the Islamic market has been concentrated on two
segments: Islamic finance and halal food products. The total size of the
Islamic market is between 10–12 trillion dollars approximately. And given that
the growth rate of the world’s Muslim population is around 1.5 percent, which
is double that of the world’s non-Muslim population, Muslims consumers
worldwide represent a strong economic force.”
But despite
the size of the global Islamic economy and its impressive growth in recent
years, there are also many difficulties associated with operating in this
market.
“The main
challenge is the adoption of new technologies,” Sabri said. “This begins at the
simplest level: Muslim consumers have become used to traditional designs,
colors and styles, which makes changing these deeply embedded aesthetic
expectations a very difficult task indeed. As such, it is important to market
and inform consumers of new innovations and to create a suitable, trustworthy
environment for the safe consumption of new products.”
Despite
this, Sabri points to the success of a number of new products and innovations
that have recently entered the market.
“This means
the Muslim consumer has become much more receptive towards new ideas,” he said.
“It is important to market these products using the language of the
consumer . . . joining local cultures with Islamic values, and
using the mother tongue of the [particular] consumer [being targeted], in
addition to applying internationally recognized standards [for all products],
which helps increase the demand for the product.”
