The United Arab Emirates (UAE) has set an ambitious goal to become a dominant force in Islamic finance, targeting a staggering 2.56 trillion Emirati dirhams ($697.7 billion USD) in Islamic banking assets by 2031. This target is a cornerstone of a broader strategy recently approved by the UAE government, aimed at significantly boosting the halal industry and solidifying its leadership in sustainable finance. The plan focuses on increasing local halal production and facilitating related economic activities.
A Multi-Pronged Strategy
The UAE’s strategy encompasses several key initiatives. Beyond the ambitious target for Islamic banking assets, the nation aims to elevate the value of listed Islamic sukuk (Islamic bonds) in the UAE to over 660 billion Emirati dirhams by 2031. Furthermore, the strategy seeks to strengthen the international sukuk market listed in the UAE to 395 billion Emirati dirhams.
This initiative arrives at a time of significant financial success for the region. Dubai-based airline Emirates recently reported its biggest profit in its 40-year history, cementing its position as the world’s most profitable carrier. The airline’s profit before tax for the year ending March 31, 2025, surged by 20% to $5.8 billion (21.2 billion Emirati dirhams), while net profit rose 18% year-on-year to reach $6.2 billion.
Innovation in Islamic Finance
Beyond the UAE, other players in the Islamic finance sector are also making strides. Bank Syariah Indonesia (BSI) recently launched several new initiatives, including a digital platform called BEWIZE, at the BSI Global Islamic Finance Summit (GIFS) 2025 in Jakarta. These innovations aim to expand access to Islamic finance and align with national development goals.
In the UAE itself, O Gold, a digital gold investment platform, has partnered with Mawarid Finance, a Shariah-compliant financial institution, to launch the region’s first Shariah-compliant gold-backed prepaid card. This partnership highlights the growing demand for innovative and accessible Islamic financial products.
The Growing Halal Market
The global halal market is experiencing substantial growth, fueled by a rising Muslim population and increasing awareness of halal certification. Consumers are drawn to halal products, perceiving them as pure, hygienic, and ethically sound. This market encompasses a wide range of sectors, including food, cosmetics, pharmaceuticals, and finance.
Key trends shaping the halal market include the integration of technology, such as blockchain for halal verification, a focus on clean label and natural ingredients, and the increasing globalization of halal products.
Can the UAE Achieve Its Ambitions?
The UAE’s ambitious targets for Islamic finance are certainly within reach, given its strategic location, strong financial infrastructure, and commitment to innovation. The nation’s focus on developing its Islamic finance sector and boosting the halal industry aligns with global trends and caters to a growing demand for Shariah-compliant products and services. However, achieving these goals will require continued investment, strategic partnerships, and a proactive approach to addressing emerging challenges in the global financial landscape. The next few years will be crucial in determining whether the UAE can truly dominate Islamic finance by 2031.