Most of the concerns expressed about the Islamic finance industry reflect the shortage of qualified professionals and Shari’ah scholars necessary to keep up with the rapid growth seen in the last five to10 years. This should be of great concern to the industry because without enough experienced people staffing the industry, there are significant limits to the rate of growth that can be sustained. In particular, the necessity of Islamic financial institutions to maintain Shari’ah supervisory boards to review and regulate the institutions practice from a Shari’ah standpoint makes qualified scholars one of the most valuable commodities in the industry.
However, Shari’ah scholars do not grow on trees and it takes a long time for new scholars to be widely accepted as authorities in the needed fields including Fiqh as well as familiarity with the finance industry. International conventional financial institutions entering the Islamic financial industry typically will look for the scholars with the broadest and longest reputation, which due to their deep pockets, creates upwards pressure on the cost of maintaining a Shari’ah board.
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The lack of Islamic bankers is one of the biggest challenges the industry faces. Attending courses and obtaining certifications on Islamic Finance is key to winning clients’ hearts and minds in the region as the sector adjusts to the growing consumer interest.
While bankers in Europe and the US face new waves of mass lay-offs, downsizings, mergers and acquisitions and even bankruptcies as a result of the sub-prime crisis, the Gulf region sees no let-up in double-digit growth.
‘The need for highly qualified executives in emerging financial hubs such as Dubai, Qatar or Riyadh is enormous,’ says Thomas W. Hofer, Managing Partner of Dubai -based executive search firm Taylor Hofer Partners.
‘The impact of the global credit crunch on Arab and international banks in the oil-rich region has been insignificant,’ he adds.
Lack of knowledge
However, for most high-potential bankers the shift to the Middle East is not a smooth career path.
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Proponents of Islamic finance should pat themselves on the back and rejoice. Not only has the industry been largely sheltered from the US credit crisis, major economies are also beginning to warm up to this relatively new form of financing.
Earlier this month, the British government announced it favoured stepping into Islamic finance, and wanted to raise some $4 million through Shari’ah compliant bonds. I was not surprised by this development as London is already home to the largest Islamic finance market in the western world, and I was quite confident the government would want to maintain its leadership status in the industry.
But what excites me the most is that my home country, Singapore, has finally decided to embrace Islamic finance. The Singapore government rarely makes the wrong decisions and I am sure they did their homework before plunging into Islamic finance. And although it is relatively a late entrant into Islamic finance, I am confident that Singapore will be making waves in the Islamic finance industry in the near future.
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The Central Bank of Bahrain (CBB) is set to launch a key Islamic financial instrument aimed at providing a much-needed liquidity management tool to Islamic financial institutions.
The Islamic Sukuk Liquidity Instrument (ISLI) has been jointly developed by the CBB and the Bahrain-based Liquidity Management Centre (LMC), an organization which provides asset sourcing, structuring and market making capabilities.
ISLI has been designed to enable financial institutions, both conventional and Islamic, to access short term liquidity against Government of Bahrain Islamic leasing (Ijara) bonds (sukuk), issued by the CBB.
The new initiative reflects CBB’s continuing commitment and contribution to the Islamic finance industry and will further enhance Bahrain’s role as a world leader in the sukuk market.
‘The development of the uniquely-structured ISLI represents a major breakthrough for the Islamic finance industry worldwide and will significantly enhance the sukuk market,’ said Dr Abdul Rahman Saif, Executive Director, Banking Operations, at the CBB.
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NEW YORK: Dow Jones Indexes, a leading global index provider, has launched the Dow Jones Islamic Market (DJIM) China Offshore Hong Kong Index.
The DJIM China Offshore Hong Kong Index represents the performance of companies that have been screened for compliance with Islamic principles and whose primary operations are in China but trade on the Hong Kong stock exchange.
Stocks included in the index are H-Shares and Red Chips.
The DJIM China Offshore Hong Kong Index is designed to serve as underlying for investment products such as mutual funds, exchange-traded funds (ETFs) and other investable products.
“The Dow Jones Islamic Market China Offshore Hong Kong Index is another innovative addition to the highly successful Dow Jones Islamic Market index series following a unique and superior methodology,” said Dow Jones Indexes editor and executive director John Prestbo.
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Bisnis Indonesia Daily News – 05-JUN-08
JEDDAH: The Islamic Development Bank predicts global sharia financial asset grows by 20% per annum to US$2 trillion by 2010 from the current US$900 billion, thanks to oil price fluctuation and sub-prime mortgage crisis.
Executive Governor of the IDB for Malaysia Dato Ahmad Husni Mohammad Hanadzlah argued the sub-prime crisis and oil price fluctuation had made investors shift from established financial instruments to safer and more transparent sharia-based ones.
“Investors forecast sharia financial assets will grow by 20% per annum,” said Ahmad, who is also the Malaysian First Deputy Minister of Finance at the 33rd Annual Meeting of the IDB’s Board of Governors in Jeddah yesterday.
Therefore, he continued, the IDB should reposition itself and capture an opportunity to expand sharia financiang and capital market.
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KUALA LUMPUR, June 3 (Bernama) — Islamic banking in East Asia is slowly developing, but needs more action by regulators to establish legal and regulatory frameworks in order to emerge as a significant segment across the region, according to an analyst.
Aside from Malaysia, where the industry’s assets now account for 15.4 percent or about US$62 billion of the country’s banking system assets, its market penetration across the region has been somewhat patchy, said Christine Kuo, vice president and senior analyst of Moody’s Investors Service.
For instance, she said, while Islamic banking has achieved relatively high market penetration in Brunei and asset growth in Indonesia has been rapid (though off a low base), Islamic banking services available in the Philippines, Singapore and Thailand remained very small in terms of asset size.
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Two Gulf borrowers are planning to sell ringgit Islamic bonds in Malaysia, in the latest move that highlights the rising cost of borrowing in US dollars, the previous Islamic bond denomination of choice.
A global credit crunch has made dollar borrowing more expensive, and bets that Gulf states could allow their dollar-pegged currencies to appreciate to dampen inflation has seen dollar assets fall from favour.
National Bank of Abu Dhabi (NBAD) plans to sell up to $925.6 million in ringgit-denominated bonds, which could include an Islamic tranche, the lender said.
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INCEIF and ICMA Centre have formalised the collaboration to jointly offer MSc in Investment Banking and Islamic Finance with a simple yet significant signing ceremony at ICMA Centre at University of Reading in UK. The degree aims to respond to the growing interest in Islamic Finance, and also the increase in Islamic Banking services, Islamic Investment and other financial services that are based on Islamic principles.
The partnership brings together two institutions with great reputations for education focused on the financial markets.
In a statement, ICMA Centre said the the MSc is the first in the UK to use Islamic material taught by Islamic specialists and aims to capture the increasing demand for the subject with an academic base and practical orientated views on issues such as Islamic Finance, Economics and Law. Students will benefit from having the opportunity to spend three months studying in Kuala Lumpur and study alongside Islamic Finance professionals. The MSc will not require any previous knowledge of Islamic Law or concepts but will explain the current issues within their overall Islamic economic and legal context.
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None of Malaysia’s Islamic banks have been hit by writedowns resulting from the U.S. subprime crisis, and the resulting global credit crunch has spurred greater interest in Sharia-compliant financing, Malaysia’s second finance minister said on Monday.
“There is a feeling that the way Islamic finance is structured — the lack of freedom in leveraging, the need for real assets — that there will be some who will find Islamic financing interesting,” Nor Mohamed Yakcop said at the Reuters Islamic Finance Summit.
Holders of sukuk or Islamic bonds, who are paid returns derived from underlying assets instead of interest, have been shielded from the worst effects of the subprime mortgage meltdown which have hit the conventional banking sector, the minister said.
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