Global Islamic Economy: The Future Solution
The Global Islamic Economy (GIE) tends to have various stigmas that make business owners prioritize it less or even avoid it entirely. Some stigmas include low power consumption, under-developed infrastructure and low growth — since it is only catering to the Muslim market. A common argument to counter this stigma is that the Muslim population is a fast-growing market, which is expected to increase by 70% from 1.8 billion in 2015 to nearly 3 billion in 2060. Hence it is recommended that every business consider the inclusion of the Muslim market. However, this argument is not convincing enough as the results may not be worth the effort. So how do we encounter this stigma?
By working as an apprentice in the Global Islamic Economy sector, through a remote community collaboration mobile platform called CollabDeen and on a related project in an Islamic Finance consultancy firm, I have surprisingly learnt a lot about the use and benefits of the GIE beyond the current stereotypes that society holds and that I had personally accepted before this. As such, I can debunk this stigma and show that GIE is in fact, the future solution of the global economy.
The Global Islamic Economy Index (GIEI) is a metric made by the Dubai Islamic Economy Development Centre in 2013 to understand government and business collaborations on halal businesses. The index is divided into 6 halal sectors: travel, media, food, pharmaceuticals & cosmetics, modest fashion and Islamic Finance. Surprisingly, Singapore is recognised in almost every sector despite not being a Muslim-majority country, which leads to an interesting question: Why does Singapore bother to be well-recognised in the GIE sector?
One of the best experiences to explain this is from the insights gained during our biggest joint-initiative between CollabDeen and Have Halal, Will Travel, a global travel and lifestyle platform for Muslims. The initiative, Reimagine: Halal in Asia 2020, has a core vision to become a pioneer in leading Halal Ecosystem in Asia, with the theme of Asia’s Golden Age: 2021 and Beyond. Reimagine: Halal in Asia 2020 is a 2-day global conference conducted by business experts in the GIE sector for experts, regardless of faith. I got to know two Muslim-convert founders in the GIE sector — an owner of a leading travel media in Asia and an owner of a food consultancy firm located in Europe and Middle East. Their journeys portray Islam as the best way of life, beyond a promising GIE future.
Islamic Finance Outperforms and is More Resilient Compared to Conventional Finance
One of the shocking facts learned during our research is that a Shariah-compliant portfolio’s returns outperform and also prove to be more resilient, with incurred benefits of lower volatility and maximum drawdown, or gradual potential loss in equity value. This is an astonishing fact, as a Shariah-compliant portfolio is limited to investing in smaller segments of a company due to the presence of prohibited products, as compared to conventional portfolios that face less restrictions. My mentor, Mohammad Raja, explains this in a simple and beautiful manner:
“Shariah-compliant investment is an action to invest in businesses that are permitted under Islamic practices that meet humanistic values, such as socially and ethically-responsible investment philosophies. Investments such as tobacco, gambling, intoxicants, adult entertainment industries, and weaponries are excluded from their portfolio”
Despite the centralisation of the gambling centre and the profits raised from this business model, there is a negative side that might offset the benefit perceived from a larger perspective. Some examples include the presence of illegal gambling sites that scam millions of people and countless dollars, the building of rehabilitation centers for gambling addiction, society’s unproductivity due to the mental backlash from the losses incurred, a broken family, and the list continues, all of which may not necessarily exist if it is was a Shariah-compliant investment. In short, Islamic Finance believes in profits occurring for all stakeholders, investors, employees, businesses and society on a larger scale, not only a zero sum game.”
A future trend towards Impact Investing — when businesses invest based on environmental, social and governmental impacts that comply with the UN Sustainable Development Goals and go beyond profit-seeking strategies — has concepts which correlate with Shariah-compliant products, but happens globally regardless of faith.
Getting Halal-Certified Food Improves your Business Significantly
John Ong, Group Executive Chairman of FT Consulting and Mustaffa Kamal, Co-Founder of The Black Hole Group, a halal food-chain business, mentioned during Reimagine: Halal in Asia 2020 conferences that transforming normal businesses to halal-certified food businesses has been proven to raise profit by 20%. Non-Muslim majority countries like Japan, China, and Singapore are on the move to cater to the Muslim market for a wider market segment. The simplest reason for this is that within a diverse community, people would cater to their Muslim members by eating at a halal-certified store. The halal food store or newly-transformed halal-store also attempt to meet non-Muslim taste buds without prohibited items like alcohol, pork and such, which increases their overall consumer base. Hence, moving towards a halal-certified business is worth pursuing.
How is a Muslimin/Muslimah able to Contribute in the Global Islamic Economy as an Individual?
After immersing in the Global Islamic Economy sector in general, there is still plenty of work that needs to be done to create holistic growth in the various Global Islamic Economy sectors. We as Muslimins/Muslimahs can contribute to and become role models for developing the fastest-growing industry — regardless of our expertise, either in technology, engineering or research in business and social sciences. Despite relying on government regulations, we are able to raise awareness and provide whatever expertise we may have on the supply side and contribute to the demand side as consumers with an Islamic lifestyle. Based on the latest State of Global Islamic Report 2020 made by DinarStandard, the Singapore government and all GIE business sectors have made substantial efforts with good collaboration. However, there is still a lack of awareness from the customer point of view. My contribution in CollabDeen to collaborate with businesses and the community is one of the methods to raise public awareness on the GIE potential, regardless of faith. This contribution may only be considered as small sparks of light, but together, it can ignite into a large array of fireworks, resulting in an even bigger impact for society.