Türkiye and its metropolis, Istanbul, have main potential within the Islamic financial panorama, in response to Yousef Khalawi, secretary-general of the AlBaraka Forum for Islamic Economy, citing the diversified financial base, strategic geography and institutional growth.
Türkiye’s ambitions took clearer form final week when officers used a serious summit to painting the nation’s potential to be a frontrunner in shaping a extra built-in, innovation-driven Islamic monetary system.
“Türkiye has a great potential, basically because it represents a real, full and comprehensive economy,” Khalawi instructed an interview with Daily Sabah on the sidelines of the 2nd Global Islamic Economy Summit.
But its benefits lie within the range of its financial foundations, he famous.
Those foundations, in response to Khalawi, embrace a powerful agricultural sector, a well-developed industrial base, and aggressive developments in companies, know-how and tourism.
The summit was organized by the AlBaraka Forum for Islamic Economy on the Istanbul Financial Center (IFC), a sprawling growth the Turkish authorities hopes will remodel town right into a monetary bridge between East and West – and between the standard and Islamic monetary techniques.
Khalawi harassed macroeconomic challenges corresponding to inflation and foreign money volatility, however highlighted Türkiye as a uncommon instance of a Muslim-majority nation with such infrastructure.
“The issue is just that challenges: inflation, foreign exchange rate, but besides that, you have a full economy,” he famous.
“When you consider that as part of the Islamic world, you would have only just a few examples like that. So Türkiye comes on top,” he mentioned.
“For this reason, there is a huge potential.”
Khalawi went on to name Istanbul “one of the top business cities in the Islamic world,” saying that the metropolis “comes in the middle of the world with its own heritage, and with its great expected future.”
“With the potential and with having also the Istanbul Financial Center, with the launch of their (Türkiye’s) first national strategy for Islamic finance, all that will lead anyone to Istanbul,” he famous.
Istanbul is now one in all three host cities of the AlBaraka Forum’s flagship summits – alongside Medina, the place the discussion board started in 1981, and London. Plans for a fourth summit within the Far East are underway, in response to Khalawi.
‘Lots to be carried out’
Despite years of regular progress, Islamic finance continues to signify solely a small fraction of worldwide monetary markets.
Khalawi mentioned an absence of public communication, innovation, regulatory readability and liquidity instruments hampers progress.
“Building the system based on the Islamic banking system is one of the reasons. Most of our experts, and most of the investment, have focused on Islamic banking,” he mentioned.
“Innovation is another issue. Regulatory framework is a third issue, and for example, till now, Islamic banks have hosted their liquidity where? In central banks. And central banks gave them interest, which is impermissible under Islamic law. This will immediately affect your profitability,” Khalawi defined.
“So, until we create an alternative instrument to manage the liquidity, you will always be affected badly by that.”
There are heaps that must be carried out, Khalawi mentioned.
Publicity is part of that, and because of this, he famous, the discussion board has been working for over a 12 months on what Khalawi described as “a strategic framework for communication in Islamic economy,” with plans to launch it subsequent 12 months on the Istanbul Financial Center.
Untapped potential
Khalawi additionally referred to the untapped financial potential given the Muslim world’s demographic weight.
“What’s the number of Muslims across the globe now? We are almost 25% (of the global population). What are the numbers reflecting the volume of their economic impact? It’s still very low compared to 25% of the population,” he famous.
Addressing the summit final week, President Recep Tayyip Erdoğan Erdoğan additionally emphasised the Muslim world’s underperformance, urging for higher intra-Islamic cooperation in commerce, finance and funding.
“Muslims account for 25% of the world’s population, yet Islamic finance assets total only about $2.5 trillion,” Erdoğan mentioned.
“The Organisation of Islamic Cooperation (OIC), which is the largest international organization after the United Nations, consists of 57 member countries. However, their share in global trade is only around 11%,” he famous.
“In terms of population, we represent 25% of the world, yet our contribution to the global economy is approximately 9%.”
Beyond banking, finance
Khalawi went on to emphasise that the Islamic financial system ought to be considered past the slim lens of banking and finance.
“When we talk about Islamic economy, we talk about it as a holistic system … it covers everything, including what they call today the socio-economy,” he mentioned.
He dismissed the notion that Islamic finance ought to be considered merely as a substitute for the standard banking system.
“Islamic economy is not something new. The new is the modern Islamic economy, which started like five decades ago through Islamic banking. But the rest of the ecosystem of Islamic economy is much more beyond that, and it’s working now for almost 14 centuries.”
Asked whether or not the Islamic financial system provides options to in the present day’s world financial challenges, Khalawi mentioned, “Theoretically, yes. Practically, we still miss strong innovations.”
He defined that whereas the philosophical and theological underpinnings of Islamic financial system are sturdy, rooted within the Quran, Sunnah and centuries of historical past, in the present day’s practitioners should adapt these rules to trendy financial realities.
“The ecosystem of the economy has been changed … You cannot just implement that experience today.”
This adaptation, he mentioned, requires funding in capability constructing.
At this 12 months’s summit, three workshops addressed vital points: sukuk (Islamic bonds), the halal sector, and the Islamic financial system’s progress potential fueled by the worldwide Muslim inhabitants.
“So when leaders understand that potential, they will invest more in developing more products and areas,” Khalawi mentioned.
Source: www.dailysabah.com