The global halal market is experiencing rapid growth, with Islamic finance at its core. The UAE has recently unveiled an ambitious strategy to expand its Islamic finance sector to $2.56 trillion by 2031. Simultaneously, Indonesia, leveraging its large Muslim population and digital innovation, is making significant strides in the halal sector, particularly in Islamic finance. Can Indonesia’s digital-first approach truly challenge the UAE’s established dominance?
UAE’s Ambitious Strategy
The UAE’s strategy involves increasing Islamic bank assets from 986 billion to 2.56 trillion Emirati dirhams within six years and boosting the value of listed sukuk (Islamic bonds) to over 660 billion Emirati dirhams by 2031. This initiative signals a strong commitment to solidifying the UAE’s position as a global hub for Islamic finance. The strategy encompasses various aspects, including regulatory improvements, innovation in financial products, and attracting international investments.
Indonesia’s Digital Leap
Indonesia is strategically using digital platforms to enhance its Islamic finance sector. Bank Syariah Indonesia (BSI), for example, launched initiatives like the BEWIZE digital platform and the Muslim Consumption Index (MCI) at the Global Islamic Finance Summit (GIFS) 2025. These tools aim to boost Indonesia’s Islamic finance sector by improving accessibility and understanding consumer behavior. Indonesia’s approach focuses on leveraging technology to overcome geographical barriers and cater to its vast, digitally-savvy population.
Key Developments and Initiatives
- UAE Strategy for Islamic Finance and Halal Industry: The UAE aims to increase Islamic bank assets to 2.56 trillion Emirati dirhams within six years and increase listed sukuk value to over 660 billion Emirati dirhams by 2031.
- Bank Syariah Indonesia (BSI) Initiatives: BSI launched the BEWIZE platform and Muslim Consumption Index (MCI) to boost Indonesia’s Islamic finance sector.
- Global Halal Market Growth: The global halal food market is projected to reach USD 9.45 trillion by 2034, with Asia Pacific dominating the market, indicating a significant opportunity for both Indonesia and the UAE.
Analysis
Indonesia’s digital-first approach has the potential to democratize Islamic finance, making it more accessible to its large population. The BEWIZE platform and MCI can provide valuable insights into consumer behavior, enabling businesses to tailor their products and services to meet the needs of Muslim consumers. This data-driven approach, combined with a focus on digital inclusion, could give Indonesia a competitive edge.
However, the UAE’s established financial infrastructure, regulatory framework, and international connections provide a strong foundation for its growth strategy. The UAE’s focus on increasing sukuk issuance and attracting international investments could further solidify its position as a global Islamic finance hub.
Challenges and Opportunities
Both countries face challenges in ensuring compliance with halal standards and addressing consumer concerns about authenticity. Blockchain technology could play a crucial role in enhancing transparency and traceability in halal supply chains. Additionally, both countries need to invest in education and training to develop a skilled workforce capable of supporting the growth of the Islamic finance sector.
Conclusion
The race to dominate the halal finance market is intensifying, with the UAE and Indonesia adopting distinct strategies. The UAE’s focus on expanding its financial infrastructure and attracting international investments contrasts with Indonesia’s digital-first approach aimed at democratizing access to Islamic finance. While the UAE currently leads with its ambitious $2.56 trillion target, Indonesia’s digital leap could potentially disrupt the landscape, offering a compelling alternative model for growth in the global halal market. The coming years will reveal whether Indonesia’s innovative approach can truly challenge the UAE’s established dominance.