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.”