Sharia compliance is the key factor driving savings decisions by United Arab Emirates nationals, where an ageing population is expected to boost demand for Islamic savings products, a top Dubai-based National Bonds Corp executive said.
“Sharia compliance has been the number one driver of choice of savings instruments among Emiratis and Arab expats,” Mohammed Qasim al-Ali said in an interview late last week. “We are seeing a definite increase in product demand.”
The company, wholly owned by the Investment Corp of Dubai, the investment arm of the Dubai government, offers a variety of savings products including a mudaraba fund which now has 4.6 billion dirhams ($1.25 billion) in assets under management.
Mudaraba is an investment management partnership, where profits are shared on a pre-agreed basis between parties but losses are borne by the provider of the capital.
The company aims to develop a range of savings products to cater to savings demand, Ali said, but declined to give a time frame for future launches.
“We are looking into all kinds of diversified products to launch and probing the market for potential strategic partnerships,” he said. “Some plans are more long-term than others.”
The industry also needs to encourage a stronger savings culture in the UAE, in particular among the youth, he added.
“There is still a culture of spending, consumerism and a demand for luxury goods amongst the Emirati population, both young and old. If we can ensure that our youth are driven towards more responsible spending, then we are hitting the root cause of the problem.”