2014 saw global Islamic finance spur economic growth in many jurisdictions, including beyond the traditional Islamic economies, spurring the industry to greater heights. In advanced European economies the sukuk market became an attractive source of fund-raising among governments who needed to explore wider options from more competitive sources, and to establish themselves in the sukuk market to pave the way for corporate issuances in the future. European economies are also active in Islamic capital markets as investors in foreign sukuk, from GCC countries among others, and as a home to Islamic asset management funds. In South East Asia a diverse range of sectors utilising Islamic banking and sukuk have attracted record demand. The Islamic banking sector in Malaysia is set to transition into a more sophisticated market, spurred by evolving and forward-looking regulatory changes. In Africa the core principles that underpin Islamic finance – risk-sharing, maximising profits, minimising inequality – is supporting of real and sustainable economic activity. Apart from the sukuk market, several African countries benefitted from Islamic loan facilities for infrastructure development and other economic programmes.

2014 saw global Islamic finance spur economic growth in many jurisdictions, including beyond the traditional Islamic economies, spurring the industry to greater heights. In advanced European economies the sukuk market became an attractive source of fund-raising among governments who needed to explore wider options from more competitive sources, and to establish themselves in the sukuk market to pave the way for corporate issuances in the future. European economies are also active in Islamic capital markets as investors in foreign sukuk, from GCC countries among others, and as a home to Islamic asset management funds. In South East Asia a diverse range of sectors utilising Islamic banking and sukuk have attracted record demand. The Islamic banking sector in Malaysia is set to transition into a more sophisticated market, spurred by evolving and forward-looking regulatory changes. In Africa the core principles that underpin Islamic finance – risk-sharing, maximising profits, minimising inequality – is supporting of real and sustainable economic activity. Apart from the sukuk market, several African countries benefitted from Islamic loan facilities for infrastructure development and other economic programmes.

The global Islamic finance industry has seen some key developments in 2014, as the industry achieved several milestones and continues to move towards greater sustainability and providing a wider range of financial services. By end of year, the total assets of the Islamic finance industry are expected to surpass USD2tln. Substantial debut sukuk issuances, from several non-OIC countries, saw the feasibility of sukuk outside the Muslim world. A number of landmark regulatory advances were made, and continued innovation, including Basel III compliant sukuk, sukuk for social causes and more cross-border sukuk activity have added further substance and sophistication for a deeper and more sustainable ecosystem.

As the Islamic finance industry evolves into a strategic financial segment to many economies, the harmonisation of global Islamic finance standards will give impetus to key areas of global growth. Streamlining can enable Islamic finance Institutions to compete more effectively with their conventional counterparts by encouraging more cross-border transactions, improve the competitiveness of Islamic finance vis-à-vis the conventional financial sector, facilitate product innovation in cross-border products and set the stage for a more cohesive and sustainable Islamic financial industry in the future as a mainstream player in the global financial landscape.

The increasingly sophisticated and challenging financial environment in recent years has placed talent development and capacity building as a high priority objective for Islamic finance policy makers to achieve sustainable development in the industry. Moreover, the financial needs of the market participants continue to evolve, underpinned by the dynamic global financial conditions, which has also led to a need for greater human capital creativity and innovation in the Islamic finance sector.

Alongside the surging mainstream Islamic financial business, there has been a rapidly growing interest in Shariah-compliant specialised investment products. Islamic REITs, Islamic ETFs, awqaf investments, Islamic private equities, Islamic venture capital and Islamic crowd-funding are finding favour with investors seeking ethically sound, wellgrounded and sustainable investment options. A number of supporting factors are driving interest among both institutional and retail and investors.

As of third quarter ended-September 2014 (3Q14), cumulative annual issuances in the global primary sukuk market has reached USD94.65bln, outperforming the same period last year by an impressive 14.1%. A total of five sovereign issuers have debuted in the primary market during 3Q14 including three non-Organisation of Islamic Cooperation (OIC) countries. These developments notably indicate the growing acceptability of sukuk instruments as viable tools for fundraisin

Awqaf are powerful socio-economic vehicles that, if efficiently managed utilising Islamic finance facilities, have the ability to eradicate poverty, establish socio-economic justice and achieve equitable distribution in a society. These Islamic endowment structures are utilised to fund real economic activities or financial investments and the returns from these are then used to achieve the societal welfare and social benefits.

The global halal economy and the Islamic finance industry are natural economic partners,but are far from fulfilling their combined potential for a holistic Islamic economy. Islamic finance can capitalise on the rapid growth of halal industries, such as food, clothing, finance and tourism, to ensure end-to-end Shariah compliance in halal operations. Huge opportunities exist in the provision of funding options for trade financing, working capital, raw materials, asset financing, as well as raising capital to fund expenditure; not only through Islamic banking solutions but also through Shariah compliant crowd-funding, venture capital financing and private equity funding.