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Industry
@ Halal | January-February . 2021
Marked opportunities
Dinar Standard wields on the Global Islamic Economy Indicator ( GIEI ) to offer comprehensive picture of countries bestpositioned to address multi-trillion-dollar global halal economy opportunity
BY CAMILIA REZALI
Since the beginning of 2020 ,
the Covid-19 pandemic hit businesses , investors , governments and the Islamic economy . Several companies and stakeholders were in a financial crisis .
In addressing the global downturn , the State of the Global Islamic Economy Report 2020 / 21 ( SGIE ), in its eighth year , plotted the opportunities to get a hook on the projected Muslim spending by 2024 . It is expected to be US $ 2.4 trillion at a five-year Cumulative Annual Growth Rate ( CAGR )
The Global Islamic Economy Indicator ( GIEI ) tracked opportunities and offered a comprehensive picture of countries best
The report covers all countries around the world that have Muslim population with unique consumer needs and demands . These countries are the ones driving the demand for the what we have estimated this year to be US $ 2.02 trillion by the 1.9 billion Muslims worldwide on the six real economy sectors .”
CEO and Managing Director of Dinar Standard , Rafi-uddin Shikoh . positioned to take advantage of the multitrillion-dollar global halal economy .
The SGIE Report themed “ The Islamic Economy Thriving in Uncertainty ” was produced by Dinar Standard . The report was launched on Nov 18 , 2020 , in Kuala Lumpur . The launch was a part of the Malaysia Tech Month 2020 ( MTM ).
“ The report covers all countries around the world that have Muslim population with unique consumer needs and demands . These countries are the ones driving the demand for the what we have estimated this year to be US $ 2.02 trillion by the 1.9 billion Muslims worldwide on the six real economy sectors ,” said the CEO and Managing Director of Dinar Standard , Rafi-uddin Shikoh .
“ But the main headline for us amid the pandemic is that the Islamic economy is thriving under the uncertainty . There are silver linings .”
Benchmarking the national ecosystem
The seven sectors included in the report were Islamic finance , halal food , modest fashion , media and recreation , Muslim-friendly tourism , cosmetics and halal pharmaceuticals .
The purpose of the GIEI is to benchmark the leading national ecosystems best able to support the development of Islamic economy business activity relative to their size .
Rafi-uddin said : “ The GIEI is a composite weighted index that measures the overall development of the Islamic economic sectors by assessing the performance of its parts in line with its broader social obligations .
“ It is made up of 49 metrics organised into four components for each of the seven sectors of the Islamic economy .
“ We saw a lot of areas disrupted by the pandemic . We identified 33 opportunities in all sectors .”
The GIEI is calculated by applying a weightage to each of the sector indicators . This weightage is the proportion of the sector ’ s consumer spend when compared to the Islamic economy spend as a whole .
Accordingly , Islamic finance and halal food sectors are accorded the highest weightage . Data used in the calculation of the indicator is from 2019 and does not account for the impact of Covid-19 .
Rafi-uddin shared : “ To enhance the indicator as it moves towards its second decade , some changes were introduced into the methodology . The indicator coverage was extended from 73 to 81 countries . Eight countries were added to the indicator , including Spain , Bosnia and Herzegovina , and Japan .”
The food exports to Organisation of Islamic
The different components that make up the indicator are as follows :
• Financial sub-indicators : metrics that gauge the size of the sector
• Governance sub-indicators : metrics to gauge the halal certification and Shariah regulatory landscape ( as applicable )
• Awareness sub-indicators : metrics to understand the extent of awareness the sector has built through the press as well as through related events
• Social sub-indicators : metrics to understand the social impact of the sector
Cooperation ( OIC ) countries were expanded to include 23 food sub-sector Harmonized Codes ( HC ), compared to ‘ meat and live animals ’ exports as the only sector considered earlier .
Potential opportunities
Despite the deteriorated condition caused by the pandemic , results of the report saw numerous notable developments in the Islamic economy - led by an acceleration in digital transformation , disruption in global supply chains , and increased government focus on food security-related investments .
The global Islamic economy continues to be underpinned by eight key drivers , including a large and growing Muslim population , an increasing adherence to Islamic ethical values impacting consumption , and an ever-increasing number of national strategies dedicated to halal products and service development .
Countries continue to build more robust Islamic economy ecosystems . Malaysia currently leads the overall Global Islamic Economy Indicator ( GIEI ) rankings for the eighth consecutive year , while Saudi Arabia moved up to second place , followed by the UAE and Indonesia .
“ For Malaysia , there is an opportunity to look at expanding and taking advantage of this disruption . While the significant halal import markets are looking for alternative sources , Malaysia should be looking to step up its exports , which today are not that significant or relative to the overall size of trade of halal products that are happening worldwide .
“ But when we look at the overall ecosystem , as you may have seen from the report , Malaysia has ranked number one first and foremost because of its strong Islamic finance ecosystem ,” said Rafi-uddin .