Since taking office in President Yameen’s government in 2012, Minster Abdullah Jihad of the Ministry of Finance and Treasury has laid out an Islamic capital market framework and worked to concentrate budgetary focus on the development of essential infrastructure to turn the Maldives into an Islamic finance hub. Minister Jihad tells us more.
How is the Maldives’ actively developing Islamic finance?
We have a vision to become South Asia’s Islamic finance hub by developing the infrastructure required. Part of the newly reclaimed land on Hulhumalé will become a dedicated financial district, where we will be creating an Islamic finance capital.
What’s the basis of your Islamic finance vision?
We have established an Islamic capital market framework using our own Shariah-screening methodology. Moreover, I recently visited Malaysia to seek technical assistance to develop the Maldives Center for Islamic Finance, an entity that was established to promote Islamic finance, as well as the halal industry.
What economic fundamentals make the Maldives attractive for investment?
The inflation in the country is low, at just 1 percent in 2015. The fiscal position is healthy as the overall deficit is expected to be 6 percent of the GDP, partially from an exceptional level of infrastructure spending. Indeed, the government’s actions clearly demonstrate this emphasis: one-third of the 2016 budget will go towards infrastructure projects, including the Islamic finance hub. We believe that these projects will increase the tax revenues for the government in the future as it will encourage more economic activity. In addition, the public debt is manageable, at 61.8 percent of GDP at the end of 2015. Hence, we believe that the time is right to invest in strategic infrastructure, build upon existing foreign investment and realize the latent potential of the economy.