State of the Global Islamic Economy Report Presents The
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State of the GLOBAL ISLAMIC ECONOMY 2014 - 2015 Report COMMISSIONED BY: DEVELOPED AND PRODUCED BY: IN COLLABORATION WITH: DinarStandard™ 30 / 100 / 100 / 50 0 / 100 / 100 / 0 0 / 80 / 100 / 0 0 / 40 / 90 / 0 Dubai the Capital of Islamic Economy Date: 25th February 2013 Andrew Noddings Office 201, Trident Waterfront Brandmark Contact: Shyrose Osman Dubai Marina Dubai, UAE T: +971 55 8803 921 www.theandongroup.com TABLE OF CONTENTS Executive Summary 4 Media And Recreation Sector 182 Acknowledgements 12 THE HALAL MEDIA AND RECREATION INDICATOR (MFI) 184 DEMAND PROFILE AND MARKET SECTORS 186 Report Purpose And Methodology 16 CURRENT LANDSCAPE AND TRENDS 188 KEY CHALLENGES AND OPPORTUNITIES 192 The Global Islamic Economy Overview 20 SPECIAL FOCUS: ISLAM-THEMED MEDIA GENRES — BROADCAST AND THE GLOBAL ISLAMIC ECONOMY — KEY SECTORS AND CONNECTIVITY RAMADAN (‘MUSALSALATS’) 194 22 INTERVIEWS AND CASE STUDIES 200 DEVELOPING BUSINESS AND CONSUMER DRIVERS 25 A DAY IN THE LIFE OF HALAL LIFESTYLE-DRIVEN MUSLIM CONSUMERS Pharmaceuticals And Cosmetics Sector 212 28 THE HALAL PHARMACEUTICALS AND COSMETICS INDICATOR 214 DEMAND PROFILE AND MARKET SECTORS 216 The Global Islamic Economy Indicator (GIEI) 36 CURRENT LANDSCAPE AND TRENDS 219 KEY CHALLENGES AND OPPORTUNITIES 223 Halal Food Sector 40 INTERVIEWS AND CASE STUDIES 225 THE HALAL FOOD INDICATOR (HFI) 46 DEMAND PROFILE AND MARKET SECTORS 48 Convergence Of Halal Food/Lifestyle And Islamic Finance CURRENT LANDSCAPE AND TRENDS 52 234 KEY CHALLENGES AND OPPORTUNITIES 58 SPECIAL FOCUS: HALAL FOOD LOGISTICS 60 Innovation And Entrepreneurship (SME) Imperative INTERVIEWS AND CASE STUDIES 66 238 Islamic Finance Sector 76 Recommended Strategies And Worksheets 254 PERSPECTIVES: DUBAI FINANCIAL MARKET (DFM), EMIRATES ISLAMIC STEP 1: MARKET SIZING ASSESSMENT SHEET 256 BANK, NASDAQ DUBAI 80 STEP 2: KEY THEMES TO CONSIDER (RECOMMENDED STRATEGIES) THE ISLAMIC FINANCE INDICATOR (IFI) 88 257 DEMAND PROFILE AND MARKET SECTORS 90 STEP 3: CUSTOMISATION STRATEGY 264 CURRENT LANDSCAPE AND TRENDS 94 STEP 4: MARKETING STRATEGY 266 KEY CHALLENGES AND OPPORTUNITIES 102 4-STEP STRATEGY WORKSHEET 267 INTERVIEWS AND CASE STUDIES 106 EXPERT INSIGHTS 270 Travel Sector 120 Appendix 274 THE HALAL TRAVEL INDICATOR (HTI) 122 THE GLOBAL ISLAMIC ECONOMY INDICATOR METHODOLOGY 276 DEMAND PROFILE AND MARKET SECTORS 124 GLOSSARY 282 CURRENT LANDSCAPE AND TRENDS 127 KEY CHALLENGES AND OPPORTUNITIES 134 SPECIAL FOCUS: HAJJ/UMRAH 136 INTERVIEWS AND CASE STUDIES 146 Fashion Sector 156 THE MODEST FASHION INDICATOR (MFI) 160 DEMAND PROFILE AND MARKET SECTORS 162 CURRENT LANDSCAPE AND TRENDS 164 KEY CHALLENGES AND OPPPORTUNITIES 166 SPECIAL FOCUS: CLOTHING E-COMMERCE 168 INTERVIEWS AND CASE STUDIES 176 p.4 State of the Gloabal Islamic Economy 2014 - 2015 Executive Summary Executive IN THE NAME OF GOD THE MOST MERCIFUL THE MOST BENEFICENT EXECUTIVE SUMMARY The 2014-15 State of the Global Islamic Economy Report presents the continuing building of Islamic economy's momentum. Much has hap- pened since the launch of the inaugural State of the Global Islamic Economy Report last year. The Halal Food sector saw investments, such as the Brazilian food group BRF investing $90 million in setting up a production plant in UAE; new Halal testing technologies emerged from France, Malaysia, and UAE; Dubai began marketing its new Halal hubs; MIHAS Malaysia saw record Halal Food exhibitors and deals. Islamic Finance saw the arrival of Sukuk in western jurisdictions of the UK, Luxembourg, Hong Kong and South Africa; Arabesque and SEDCO built momen- tum around SRI investing; a mega-Islamic bank was announced from Malaysia. In Travel, Maldives saw a hotel investment in a Muslim- friendly resort; Spain, Japan, Philippines and Russia took steps to attract Muslim customers; luxury hotel chain Shaza, that is Halal lifestyle focussed, planned expansion; HalalTrip.com gained traction while HalalBooking.com offered innovative pricing features. In the Modest Fashion space, DKNY and UK-based department store John Lewis intro- duced the Muslim audience to focussed modest fashion/accessory lines. The Media and Recreation space saw the launch of a Muslim super-hero ‘Kamala Khan’ by Marvel comics; Ramadan drama-series (Musalsalat) continue their multi-million dollar pro- ductions; Bitsmedia’s Muslim Pro app reached more than 10 million downloads. The Pharmaceuticals and Cosmetics sector saw Malaysia’s Halal Industry Development Corporation receive a $100 million investment for a Halal vaccine production; “H,” a Halal-certified nail polish, was launched in the GCC. In a trend towards the beginning of convergence among these sectors, Islamic designer Peter Gould coordinated to launch a clothing line with U.S.-based Artizara; MasterCard partnered with Zilzar.com, a new global Muslim lifestyle marketplace platform, and is preparing to launch a Halal benefits program for its million dollar plus Shariah-compliant card holders. The past year also saw some set-backs/controversies. Growing Halal Food screening saw Qatar pull several American brands; non-stunning of animals for Halal slaughter saw a backlash in the EU; the National Commercial Bank’s (Saudi Arabia) IPO listing saw a fatwa against investing in it; the globally growing The 99 super-hero comic/animation series also experienced a fatwa against it; several resorts in Morocco banned the burkini (the Muslim full cover bathing suits) in their pools; an Islamic fashion show in the USA got abruptly cancelled. Not to be missed, the Islamic extremist militancy, including the dramatic rise of the brutal ISIS, has put a dent in global positioning and branding of Islamic Economy sectors. — Size & momentum Despite the challenges, and driven by growing demand, the Islamic economy sectors continue to flourish. This Report represents the global Islamic economy as core sectors and their ecosystem structurally affected by Islamic values driven con- sumer lifestyle and business practices1. Collectively these majors sectors are: Islamic Finance, Halal Food and lifestyle sectors (Modest fashion, Travel, Pharmaceuticals and Cosmetics, and Media and Recreation.) This 2014 –15 Report estimates that the global expenditure of Muslim consumers on food and lifestyle sectors grew 9.5%2 from previous years’ estimates to $2 tril- lion in 2013 and is expected to reach $3.7 trillion by 2019 at a compound annual growth rate of 10.8%. This forms the potential core market for Halal Food and life- style sectors. In addition, this Report estimates Islamic Finance assets at $1.66 trillion in 2013. Islamic funds and Sukuks led the growth with 14% and 11% growth year-on-year, whereas banking experienced a 5% drop in its assets. This Report estimates poten- tial the universe of Islamic Finance assets in its core market (assuming optimal scenario) to be $4.2 trillion3 in 2014. 1 DinarStandard definition 2 From updated 2012 baseline Muslim consumer food & lifestyle sector expenditure of $1.82 billion 3 The optimal scenario assumes full regulatory support for Islamic finance in OIC markets and a 100% Islamic banking pene- tration with the proportionate Muslim demographic of OIC countries. p.6 State of the Gloabal Islamic Economy 2014 - 2015 Executive Summary Executive — Values-drivers The customers of this Islamic economy are universal with shared values. At the highest level, values-based customer needs that are driving these Islamic economy sectors include Islamic/ethical financing, Halal (lawful) and Tayyab (pure) food, modest clothing, family-friendly travel, gender interaction considerations, and reli- gious practices. These needs also extend to business practices that seek Islamic business financing, investment and insurance services (Takaful). It is however impor- tant to recognise the wide diversity in awareness and adoption of Halal within the core customer base of Muslims globally. — Introducing GIEI This year the Report introduces a formal Global Islamic Economy Indicator (GIEI), a composite index that presents the current development health of Islamic economy sectors across 70 core countries. Malaysia, UAE and Bahrain lead this inaugural composite index. The indicator is not a ranking the current size and growth of each market but evaluates the quality of the overall Islamic economy ecosystem, includ- ing social considerations each has relative to their size4. The ranking is weighted towards Islamic Finance and the Halal Food ecosystems given their relative sizes to other sectors. Top countries vary per sector reflecting relative strengths in each of the sectors covered in this Report. — Halal food & lifestyle sector update DinarStandard estimates of the global Muslim population expenditure on Islamic economy identified sectors (besides finance) are: • Food market: Global Muslim spending on Food and Beverages (F&B) has increased 10.8% to reach $1,292 billion in 2013. This takes the potential core Halal Food market to be 17.7% of the global expenditure in 2013 compared to 16.6% the year before. This expenditure is expected to grow to a $2,537 billion market by 2019 and will account for 21.2% of the global expenditure. Top countries with Muslim consumer food consumption are Indonesia ($190 billion), Turkey ($168 billion), Pakistan ($108 billion) and Iran ($97 billion) based on 2013 data. Meanwhile, Malaysia, UAE and Australia lead the Halal Food Indicator that focusses on the health of the Halal Food ecosystem a country has relative to its size. A special focus report on Halal Food Logistics estimates logistic costs for the potential global Halal