Islamic finance can help GCC countries achieve their Visions
"Islamic finance is becoming an increasingly important area of finance that Gulf economies are tapping into to broaden their economies
Arabic business couple working together on project. Image for illustrative purposes only.
Countries throughout the Gulf Cooperation Council are drawing up sweeping plans to transform themselves into diverse, advanced economies no longer solely reliant on oil for their wealth, and Islamic finance is set to play a major part in helping these countries achieve their goals.
Saudi Arabia, the United Arab Emirates, Bahrain and Qatar each have their own Vision 2030 to reform their countries by that year. The Kuwait National Development Plan aims to hoist the country into the top 35 percent of countries in all relevant indicators by 2035. Oman is drawing up plans for a Vision 2040.
The shock of the 2014 oil price crash and the damaging effect on GCC countries' finances has jolted their governments into action. There are common themes running through all or most of these transformative visions. Chief among them is an aim to diversify Gulf economies away from sole reliance on natural resources.
Greater presence for private sector
To this end, governments will encourage a greater presence for the private sector and a more encouraging environment for small and medium-sized enterprises (SMEs). Government administrations will be reformed to improve efficiency and transparency, assisted by online and electronic disclosure, while some government services will be outsourced to the private sector. There will be substantial welfare and labour market reforms, and reductions in the generous subsidies Gulf citizens have long enjoyed for essentials such as fuel, electricity and water.
Many in the Islamic finance industry believe they can help the Gulf governments achieve their visions. With global assets of $2.2 trillion in 2016 expected to rise to $3.8 trillion by 2022, according to the ICD-Thomson Reuters Islamic Finance Development Report 2017, Islamic finance is becoming an increasingly important area of finance that Gulf economies are tapping into to broaden their economies."
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