Another area that is wide open for innovation is the integration of takaful with elements of waqf, sadaqah and zakat to fund the provision of takaful coverage to the poor. I understand that a microtakaful waqf product to help out those in the low income segment was launched a few weeks back. I look forward to seeing more products such as these in the future. There is strong potential for takaful to take the lead in solving development challenges facing the world, including poverty and environmental degradation. Takaful can also be the missing link for businesses. The potential is enormous just by looking at the list of large infrastructure projects being undertaken. In Malaysia, just to name a few, there are the two new MRT lines, the ECRL and the KL-Singapore High Speed Rail in the pipeline. Internationally, there is the Belt and Road Initiative. All these entail large protection needs. Capturing these opportunities would require much greater capacity to underwrite large and specialised risks than currently exists in the industry today. This calls for greater retakaful capacity. Given the absence of such retakaful operators, alternative arrangements for the industry to come together to pool their capacity, expertise and business need to be seriously explored.
On the demand side, the relative importance of China and the US in powering the world economy may help to explain why world oil demand grew quite so strongly relative to world GDP last year. This year, however, the sharp rise in prices owes at least as much to supply factors. Allowing for these caveats, this is still a much stronger world economic background than, say, 2001. But there are several important risks to this outlook. The first concerns oil prices. So far the world economy has apparently taken a tripling in oil prices in its stride, thanks to the much lower oil intensity of output, and the greater flexibility in labour markets, in most advanced economies compared with a generation ago. It is also true that the short term capacity of oil producing countries to spend their increased revenues is now much greater than it was in the 70s. This helps to explain why consensus forecasts for world GDP growth next year have remained remarkably steady. But there is a very high level of uncertainty about future oil prices. Judging by the oil futures curve, the central view is that prices are likely to remain high, at around $ per barrel for the next few years at least. This is in contrast to 2000, when the oil futures curve was downward sloping. But the range of current Consensus forecasts is very wide – from around $ and $ per barrel.