Islamic Finance Malaysia

Monday 30 December 2013

Growth of Malaysia's insurance, takaful sectors seen stable

KUALA LUMPUR: The growth of the insurance and takaful sectors for 2014 will remain stable amid domestic demand, said industry experts.
Takaful Malaysia group managing director Datuk Mohamed Hassan Kamil said strong growth prospects and improved risk management would lead to increased demand for insurance and takaful amongst the public at large.
He said the industry is anticipated to remain encouraging for both conventional and takaful operators through the introduction of new or enhanced and innovative products by insurance takaful companies.
“There is plenty of room for organic growth, given the fact that Malaysia still has low insurance penetration in both the conventional and takaful sectors.       
“In addition, we project a muted earnings growth outlook in certain areas of the local insurance and takaful industry arena that is likely to be impacted by investment de-risking and financial market volatility,” he told Bernama.
Regarding market players, he said the local insurance and takaful players are expected to utilise multiple distribution options available and develop alternative channels whilst strengthening their agency force to establish a solid foothold in the industry.
He said this will be supported by the implementation of strategic marketing and operating systems on top of competitive and cutting-edge products and services offered by respective industry players.
Hassan Kamil said despite the positive outlook, the industry will face diverse changes that were expected from the enforcement of the Risk-Based Capital (RBC) framework in 2014.       
“The RBC implementation might change the landscape of the takaful industry and the expected contribution growth is deemed to accelerate modestly, with fairly robust growth amongst takaful operators outpacing the conventional players,” he said.
Apart from that, both industries have been experiencing an influx of mergers and acquisitions (M&As) resulting in more foreign insurers tapping into the Malaysian insurance market, he said.
Amongst M&As this year were Khazanah Nasional Bhd’s partnership with Canadian-based Sun Life Financial Inc to acquire 98% of CIMB Aviva Assurance Bhd for RM1.8bil, and American International Assurance Bhd’s acquisition of ING’s insurance and takaful business in June 2013.
The industry has seen new players from Canada and the US coming into the Malaysian market, taking over the smaller local players.
“We have witnessed the emergence of financial solid players in the local insurance industry arena as a result of the M&A exercises.       
“The insurance and takaful industry in Malaysia remains encouraging for both life and general insurance and takaful despite moderating economic growth following the slowdown in major advanced countries,” Hassan Kamil said.
The persistent talent shortage, of professionals well versed in both principles, would be one of the main areas that need to be looked at critically in order to remain competitive in the industry, he said.
In addition, he said the rapid development of insurance and takaful industry has made it all the more difficult to recruit the right human capital needed for the various job functions. 
(The Star Online / 23 Dec 2013)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: Jeddah-based IDB plans to develop Islamic centre of excellence at Tun Razak exchange

KUALA LUMPUR: The Islamic Development Bank (IDB) is considering developing an Islamic Centre of Excellence at the Tun Razak Exchange in the Greater Kuala Lumpur here in three to five years, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said today.

He said the centre of excellence would provide services in Islamic finance and banking-related transactions.
The project would be developed in collaboration with the Malaysian government, he said.
"The Malaysian government has always viewed IDB not only as an international institution but also as a partner in charting our nation's growth," he said in his speech at the IDB High Level Regional Forum today.


(News Straits Times / 17 Dec 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Wednesday 11 December 2013

Malaysia: UDA to work with Bank Muamalat in developing RM1b wakaf land

PETALING JAYA (Nov 12, 2013): UDA Holdings Bhd will work with Bank Muamalat (M) Bhd to develop 40.47ha of wakaf land with a gross development value of RM1 billion.
The land, ready for development, is spread throughout the country and owned by the respective state Islamic Religious Councils.
Bank Muamalat will provide the end financing for UDA to develop the land.
UDA Holdings group managing director Ahmad Abu Bakar said implementation of development projects on the wakaf land will be based on the concept of Ijarah or leasing.
"Through this concept of Ijarah, ownership of the land to be developed remains with the state Islamic Religious Councils, and only its usage will be transferred," he told reporters after the signing of a memorandum of understanding for the development of the wakaf land between Bank Muamalat and UDA Holdings, here today.
"UDA's model and springboard for the development of wakaf land on a commercial basis using the Ijarah concept, is based on the success in developing the 3.94ha belonging to the Penang State Islamic Religious Council," Ahmad said.
He said the development of wakaf land is still being fine tuned and UDA had also received letters of offer to develop such land in Selangor.
To realise the development of wakaf land, UDA acting as the developer, will underwrite the development costs, while also being responsible for marketing the projects.
"Development of the wakaf land will help add value as well as generate optimum returns," Ahmad said.
(The Sun Daily / 12 Nov 2013)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: Syariah-compliant securities will attract more Middle East investors: PM

KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak is confident the introduction of shariah-compliant securities will attract more investments from the Middle East.

"With the onslaught of a new wave of investments, more job opportunities will be created and this will indirectly make our economy stronger," he said in his latest Facebook posting.
 
Najib, who is also Finance Minister, said luring foreign investments into the country was Malaysia's top priority towards becoming a high-income status  country.
 
"Based on this aspiration, the Securities Commission has introduced revised Shariah-compliant securities in order for Malaysia to draw more investments from the Middle-East," he said.
 
The Securities Commission announced yesterday an updated list of Shariah-compliant securities approved by its Shariah Advisory Council (SAC), based on the revised screening
methodology announced on June 18, 2012.
 
Under the revised screening methodology, SAC will adopts a two-tier quantitative approach which applies the business activity and financial ratio benchmarks. 
 
The revision took into consideration the rapid development taking place in Malaysia's Islamic finance industry since the Shariah screening methodology was first introduced in 1995. 
 
The revision will potentially spur greater inflow of foreign Islamic funds into Malaysian Shariah-compliant equities, thus expanding the Islamic capital market’s global reach, as outlined in the Capital Market Masterplan 2.
 
The updated list, which took effect yesterday, will feature a total of 653 Shariah-compliant securities which constitute 71 per cent of the 914 listed securities on Bursa Malaysia. 
 
The list includes 16 newly classified Shariah-compliant securities and excludes 158 from the previous list issued in May. 
 
To facilitate transition under the revised screening methodology, investors are given six months from Nov 29, being the effective date of the list of Shariah-Compliant Securities, to dispose off securities that are excluded from the list.
 
During the six-months period, dividends received and capital gains realised from the disposal of such securities may be retained by investors, without the need to channel any portion of the dividends and capital gains to Baitulmal and/or charitable bodies.

(News Straits Times / 30 Nov 2013)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Monday 9 December 2013

Islamic banking expected to 40% of Malaysia’s financial sector by 2020


Islamic financial business is at the heart of the Tun Razak Exchange (TRX) project, with some experts calculating that Sharia-compliant transactions could account for up to half of the business that will go through the new centre when it is complete.


Dato’ Azmar Talib, the chief executive of 1 Malaysia Development Berhad (1MDB), the real estate business overseeing the project, says Islamic banking comprises about a quarter of Malaysia’s domestic financial market in terms of assets and financing, but this is expected to reach 40 per cent by 2020, when TRX will be well developed.

“We intend to use Malaysia’s strengths, particularly in Islamic finance, to provide the infrastructure that will enable innovation, attract skilled talents and promote ease of doing business in the sector,” he says.

Others are even more positive about Kuala Lumpur’s potential in the global race to build the leading Islamic financial market. Many analysts believe the competition will come down to a three-way pull between KL, Dubai and London.

Malaysia has longevity on its side, and a developed domestic market. About 60 per cent of primary market sukuk (Islamic bond) issuance was in KL in the first half of this year.

Mohammad Daud Bakar, the chairman of the Sharia Advisory Council of Malaysia’s central bank, says the country has advantages in Islamic finance, such as a developed pensions funds industry, takaful (insurance) and long-term project finance.

“We have established private Islamic ratings agencies that vet the sukuk, and we are the only country with a Sharia-compliant equivalent of the American mortgage firms like Freddie Mae,” Mr Bakar says.

But despite the strength of the domestic industry, Malaysia faces some challenges in the international market. “Around 90 per cent of our issuance is in local currency, so we don’t trade in London. Malaysia has never issued any global sukuk. London uses hard currency, and has deep pockets of dollar reserves, which we do not,” he adds.

“But I believe the UAE will be a leader in this market in the future. It has dollar reserves and will be in a position to take business from London.”

Mr Bakar also points to the potential of the Saudi market. “It is booming because of all the infrastructure that needs to be financed there. It’s a booming market and will probably overtake KL in terms of value of issuance, if not volume,” he says.

(The National / 07 Dec 2013)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Saturday 7 December 2013

`Malaysia has the best Islamic finance module'

finance module' --> MANAMA ( Bahrain ): STANDARD Chartered Saadiq Malaysia (Saadiq Malaysia) believes that Malaysia's Islamic finance module is the closest to perfection and, as such, is utilising it to the betterment of its global operations. "There are best practices everywhere, butwe believe that Malaysia right now has the best module, and that's why we are bringing in talent from all over the world to learn this," Wasim Saifi , Saadiq Malaysia's chief executive officer and global head of Islamic banking, told Business Times at the World Islamic Banking Conference (WIBC), here, yesterday. "Right now, we are in the process of bringing in talent from our global branches to Malaysia in order to allow them to work and learn the Malaysian module so that when they go back in three years or so, they will be able to emulate the module in their countries," he said. Wasim noted that as of now, Saadiq Malaysia has already brought in two talents from Dubai , two from Pakistan , and two more from Bangladesh and Indonesia , respectively, in early next year. "We're not even looking at the numbers when it comes to bringing in talent into the country," he said, when asked how much investment Saadiq Malaysia was putting into the exercise. "It's really not an issue because at the end of the day, we can have all the technology and the products, but there's no point if we don't have the talent and the expertise to manage them," Wasim said, adding that the exercise, which started this year, will continue till 2015. He also said that Saadiq Malaysia is looking to aggressively grow its small- to medium- sized enterprise (SME ) segment next year, while also looking to raise its product disbursement via 32 existing Standard Chartered branches. "SME is always an important segment not only to Saadiq, but also the group. So we do have plans to increase this next year, but I can't reveal how just yet," he said. Wasim earlier participated in the CEO and industry leaders' power debate in "New Strategic Approaches to Revitalise Global Growth" and was a panelist in the "Expanding the Global Reach and Depth of Islamic Finance" session. The conference is now in its 20th year and saw the participation of 1300 delegates from 50 countries.

(HispanicBusiness.Com / 05 Dec 2013)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Thursday 5 December 2013

Malaysia: Support for Hong Kong Islamic financial market

PETALING JAYA: More measures to encourgae the development of the Hong Kong’s Islamic financial market, particularly the sukuk and the Islamic fund management industry were discussed during the first meeting of the Joint Finance Forum which was held in the special administrative region.
The forum was held yesterday following an agreement between the Hong Kong Monetary Authority (HKMA) and Bank Negara in August to strengthen collaboration between Hong Kong and Malaysia in the area of Islamic finance.
The forum participants agreed to identify potential sukuk issuers and encourage cross-border sukuk issuances between Hong Kong and Malaysia.
In particular, corporations located in the region could be one of the key sources of potential sukuk issuers.
“Hong Kong market players supported that sukuk should be offered as one of the possible options or solutions to their clients who have funding needs, as sukuk can be a means for potential issuers to expand their investor base.
“Participants also welcomed the initiative of the Hong Kong government to consider issuing sukuk, which will showcase Hong Kong’s Islamic financial platform to local and international issuers and investors,” said HKMA and Bank Negara in a joint statement.
The participants also agreed to consider launching Islamic funds and make use of the established mutual recognition framework for Islamic funds between Hong Kong and Malaysia to facilitate cross-border Islamic financial activities.
This will encourage a wider range of syariah-compliant fund offerings in Hong Kong and Malaysia.
The meeting also agreed to enhance the strategic financial linkages between Hong Kong and Malaysia aimed at facilitating cross-border investment flows and creating greater opportunities for investors from the region and other parts of the world, the statement said.
HKMA and BNM acted as facilitators, while the Financial Services and the Treasury Bureau of the Hong Kong Government, the Securities and Futures Commission and the Hong Kong Exchanges and Clearing Ltd also participated in the meeting.
(The Star Online / 04 Dec 2013)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Friday 29 November 2013

Malaysia: New ruling to maintain Muslim business legacy

PETALING JAYA: The Labuan International Business and Financial Centre (LIBFC) has cleared the regulatory requirements that will allow Muslim businesses to maintain the core wealth of the company under Islamic beneficiary laws.
Dr Mohd Daud Bakar, chairman of the Shariah Advisory Council for Bank Negara Malaysia and LIBFC, said a fatwa issued by the council in April has allowed the creation of trusts that will allow the family business to be preserved and passed down to ensuing generations in a non-disruptive way.
Traditionally, Islamic wealth is passed down the generations through a system called ‘faraid’, which allows for the wealth to be divided among beneficiaries.
Mohd Daud said by creating trusts, Muslim family businesses will survive after the death of the principal.
“Businesses that had been build over a period of time would not be dismantled as Muslims can create waqf or trust foundations that will prevent the dissolution of business empires or lead to the massive erosion of wealth,” he told The Malaysian Reserve in Kuala Lumpur yesterday.
Speaking on the sidelines of the Islamic Wealth Management forum, Mohd Daud said these trust funds will be professionally managed in LIBFC. “Muslim families are given the option to create a foundation that ensure that wealth will not be subject to ‘faraid’ upon death as the trustee can manage for the benefit of the beneficiaries,” he said.
Mohd Daud, however, said though the new ruling is subject to challenges in the Shariah courts, it is a way to allow high net worth Muslims a way to ensure that their legacy is not broken up.
The fatwa that was issued in March allows Muslims to equally distribute the assets to sons and daughters and addresses the uneven distribution under ‘faraid’ that is biased towards male heirs.
Also at the forum, former Chief Justice Zaki Azmi said Islamic finance was sparked off by the discovery of oil in the Middle East that resulted in the demand for banking system that is free from interest and other non-halal practices.
Zaki said the sudden rise in wealth of Arab countries created a need for Western banks to adopt Islamic-compliant systems in order to attract Arab money.
“These Muslims wanted to invest but do not want their money to be tainted by transactions which are based on interest and therefore haram.
The monies belonging to billionaire Muslim Arabs were mostly in the western financial institutions, which practise the Jewish banking system (interest or usury-based),” said Zaki.
Speaking at the Islamic Wealth Management Seminar in Kuala Lumpur yesterday, Zaki said when Arabs became reluctant to put their money in the western banks, because they will be tainted by haram or illicit dealings, the banks had to tailor the investments to make them halal.
“It began in Dubai, hence the beginning of Islamic financing,” Zaki said.
He said from this spark, other countries, notably Malaysia has spearheaded the move to allow Islamic banking to flourish.
“To avoid any challenge that the method of financing was not according to Shariah, a fatwa council was set up giving confidence to investors of the compliance of the products with halal principles,” Zaki added.
Islamic banking assets under management is anticipated to reach US$2 trillion (RM6.46 trillion) by 2014 globally, while Malaysian banks are the leading Islamic banks in the South-East Asian region.
(Free And Independent / 28 Nov 2013)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Friday 15 November 2013

London, Dubai, Kuala Lumpur in three-way fight for Islamic finance crown

(Reuters) - When the British government said last month it would issue its first Islamic bond, the implications went far beyond the debt market: it was a signal that London will not back down in an escalating tussle among cities for Islamic financial business.
London has long been the default center for international firms to issue sharia-compliant bonds, part of a fast-growing Islamic finance sector that will be worth $2 trillion globally next year, according to consultants Ernst and Young.
But it faces a mounting challenge from two centres: Dubai and Kuala Lumpur.
Dubai, at the heart of the wealthy Gulf, announced a push into Islamic finance this year. It has an entrepreneurial culture which has already made it the Middle East's top conventional banking center, and big state-run firms which can be expected to support the government's strategy.
The Malaysian capital has a reputation for efficient regulation of Islamic finance and a huge domestic market for local-currency Islamic bonds, which is now starting to attract foreign issuers.
The final result of the three cities' rivalry may not be known for years, but thousands of jobs and large amounts of direct investment in companies and real estate are likely to depend on the outcome.
"You need a critical mass of borrowers and investors," said Khalid Howladar, senior credit officer at Moody's Investors Service. "You have multiple centres that are looking to establish their pre-eminence in the Islamic space."
GROWTH
Islamic banking, which obeys religious principles such as bans on interest and pure monetary speculation, is still dwarfed by conventional banking with over $100 trillion of assets.
But the top 20 Islamic banks have been growing 16 percent annually in the last three years, far outpacing their conventional rivals, according to Ernst and Young. That makes Islamic finance tempting for many non-Muslim institutions.
In an unstable global market environment, the conservatism of Islamic financial structures may be helping the industry. Its access to big pools of Islamic investment funds in the Gulf oil-producing states and southeast Asia is certainly a factor.
Over the past year, the industry has been expanding from its traditional bases in those two regions across many nations with significant Muslim populations, from North Africa and Kazakhstan to Nigeria and Djibouti. European financial firms have tapped Islamic funds by issuing sharia-compliant bonds, known as sukuk.
That promises big rewards for the financial centres which arrange issues of sukuk and other Islamic products, employ the experts who structure them, and host the scholars who vet them for religious permissibility.
"The pent-up demand for short-term papers to manage liquidity in Islamic finance is huge, and to meet this will require other market players to come in," Malaysia's central bank governor Zeti Akhtar Aziz told Reuters.
Dubai laid claim to such business in January this year when its ruler, Sheikh Mohammed bin Rashid al-Maktoum, announced a drive to develop the emirate as an Islamic financial center.
Its main competitors responded. In March, Britain launched a publicity campaign involving government junior ministers and private sector executives to burnish London's Islamic credentials.
In May and June, Malaysia took steps to strengthen its regulation of the industry while making it easier for its Islamic insurers to invest their money overseas.
SUKUK
The most high-profile - and most cut-throat - area of competition between the three centres is arranging sukuk. London has led in attracting issues by big international companies because of the massive size of its conventional financial markets and its globally respected legal system.
Malaysia, however, has the advantage of a vibrant market in local-currency sukuk, thanks to a Muslim-majority population; Kuala Lumpur has accounted for about two-thirds of all sukuk issued globally this year. That is persuading some foreign firms, from as far afield as Kazakhstan, to issue in Malaysia.
Dubai lists relatively few sukuk on its exchanges; traditionally its state-owned companies have gone to London to issue. But a determined campaign by Dubai's government is now convincing its companies to issue at home, and could attract business from firms in neighboring Gulf states.
British Prime Minister David Cameron appeared to be trying to head off that threat last month with his plan for Britain to become the first Western country to issue a sovereign sukuk.
"The UK sukuk announcement has really helped to galvanize the market," said Farmida Bi, European head of Islamic finance at law firm Norton Rose Fulbright in London, predicting the sovereign issue would help to trigger corporate issues.
However, Dubai won a victory this month when the Jeddah-based Islamic Development Bank, which has long operated sukuk issuance programs in London and Kuala Lumpur, said it would set up a $10 billion program on the Nasdaq Dubai exchange.
"I do believe Dubai can reach a leadership position, although progress has been slow and it will take a few years to reach the level of Malaysia," said Apostolos Bantis, emerging markets credit analyst at Commerzbank in London.
Because London is not located within a natural pool of sukuk issuers and European customers will remain a limited group, its position looks weakest among the three centres from a long-term perspective, Bantis added.
TAKAFUL
Other areas of competition include Islamic insurance, known as takaful, and asset management. Once again, London's sheer size gives it an advantage, while Kuala Lumpur benefits from its location in a vast, predominantly Muslim area of southeast Asia.
British-based firm Cobalt struck a blow for London earlier this year by developing a novel syndication model for takaful. The model offers A-rated capacity which most carriers in the Gulf lack, said chief executive Richard Bishop.
This could clash with Dubai's plans to expand in takaful. Abdulaziz al-Ghurair, head of the authority overseeing Dubai's financial center, said last month that since there were only 19 Islamic re-insurance firms globally, takaful firms were forced to transfer some of their risk to conventional re-insurers.
That creates a window for Dubai to set up Islamic re-insurers, he said without detailing how this would be done.
Ultimately, much will depend on which financial center can establish "thought leadership" in Islamic business, creating standards and structures which come to be accepted across regions and, ideally, across the global industry.
Traditionally, Malaysia has been influential because of its centralized model of regulation, which minimizes disputes among different boards of Islamic scholars. But some Gulf scholars view Malaysian regulation as too liberal, arguing that it permits structures which too closely mimic conventional finance.
Dubai has a chance to chart a path between these two camps; it has said that after consulting the industry, it will issue sukuk standards that are more detailed and comprehensive than others, hopefully resolving conflicts between the regions.

"This is very important. We think it's a basic requirement but it doesn't exist as we speak. But this will not come from the sharia scholars - it has to come from the industry," said Hamed Buamim, director-general of the Dubai Chamber of Commerce & Industry, which is promoting the emirate's Islamic push.
(Reuters / 12 Nov 2013)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Thursday 31 October 2013

Malaysia: Training gap overshadows Malaysia's Islamic finance growth


KUALA LUMPUR: Finding a job is often harder than expected for graduates hoping to enter Malaysia's Islamic banking industry, the world's second-largest with US$124 billion in assets - employers are proving choosy about qualifications.

Thousands of students, a large number of them Muslims from across the globe, have flocked to the many Islamic finance courses offered in Malaysia, seeing them as springboards to a career.

Malaysia has an estimated 50 course providers and 18 universities which offer Islamic finance degrees, and it boasts the largest academic output globally. The country has published 169 research papers on Islamic finance in the last three years, according to data from Thomson Reuters.

But while the Malaysian Islamic banking industry's output in monetary terms is growing about 20 percent annually, employment in it is expanding at less than half that rate - even though an additional 22,400 jobs are needed to support the growth, according to a blueprint for the financial sector prepared by the central bank.

Malaysia is experiencing a problem faced by Islamic finance sectors around the world: training and qualifications often do not provide the levels of specialism and sophistication that employers need.

The problem is limiting growth of the industry and, some say, stifling innovation that is necessary to bring Islamic finance fully into line with religious principles, and prevent its products from merely being pale reflections of conventional financial instruments.

"A common misunderstanding of these young graduates is that they believe there is such a thing as a generic job in Islamic finance. In reality, the industry is looking to employ specialists," said Raymond Madden, chief executive of the Asian Institute of Finance (AIF), set up by Malaysia's central bank to develop human capital for the region's financial industry.

This means graduates are often inadequately equipped, and few in the industry are actively trying to solve the problem, he said.

"It's a major issue - nobody wants to take ownership of training graduates in areas that are most needed by the industry," added Sofiza Azmi, AIF's head of strategy and development.

The Islamic finance sector's need for specific skills in risk management as well as internal audit and governance, plus a basic grounding in sharia law, is not being communicated, she said.

"Moving forward you need to understand where the banks are going, how they are going to expand, what their plans are. Then you can map out their talent needs."

YOUNG

One reason for the skills mismatch in Islamic finance is the youth of the industry; it was born in its modern form in the 1970s, and in many countries has only become a mainstream industry in the past decade.

The industry has moved into relatively complex areas, such as Islamic money market instruments and hybrid Islamic bonds with equity-liked characteristics, only in the last few years.

The fragmentation of Islamic financial regulation, with sharia boards and national regulators in various countries taking different approaches to some core products and concepts, may also be an obstacle to effective training.

Employers could provide some of that specialised training, but banks in Malaysia have so far been reluctant to do so because of the time and cost involved. Instead they tend to poach skilled staff from rivals, a quicker and cheaper alternative.

"The banks will have to step up. If they need people specialising in areas, they will have to train internally," Azmi added.

Universities also need to revamp their curricula to suit industry needs, but it inevitably takes a long time to evaluate and implement changes, she said.

Malaysian authorities have responded by trying to intervene directly in the job market; the International Centre for Education in Islamic Finance (INCEIF) was set up by Malaysia's central bank in 2009 to help with training.

But Syed Othman Alhabshi, INCEIF's chief academic officer, said the centre's signature Chartered Islamic Finance Professional qualification, a one-year postgraduate programme, had only attracted a handful of industry executives to its staff.

Only five of the centre's full-time lecturers boast actual exposure to the sector and most have retired from active involvement in the corporate world, he said. The centre's 12-member professional development panel, which meets quarterly, has only two Islamic bank heads, from Bank Islam and OCBC Al-Amin.

About 60 percent of INCEIF's graduates find employment within six months, according to an internal survey, the centre said, declining to provide further details of the survey.

While the centre's programmes have evolved over time, its graduates are not designed to be specialists, so the task of further training falls on banks, said Syed.

"Our first job is to train them. If they can get a job here, its fine. But if not, we can't do much. It's up to the employer whether they want to take the extra mile."

Syed added that job opportunities for Islamic finance graduates were limited partly because companies such as Maybank Islamic, the largest Islamic bank in Asia, did not need large workforces as they could leverage staff from their parent firms - in Maybank's case, Malayan Banking.

AIF hopes a new advisory panel comprising representatives from across the industry can close the gap.

A new Financial Services Talent Council, being planned by the central bank, is to include individuals from the education ministry, Islamic banks and universities, in the hope of setting a national agenda for the industry's talent needs.

"If you've got this diversity of people to discuss a particular issue, you'll be able to come up with a better solution," Azmi said.

ACCESS

Many foreign students expect easy access to Malaysia's job market when they obtain local Islamic finance qualifications, but some are turned down because banks face costly, time-consuming visa requirements to hire foreign students.
"They waste one year here, and many of them are upset with this," said Omar Alaeddin, an INCEIF graduate and current member of its student representative council.

So many students return to their home countries with Malaysian Islamic finance qualifications. This has the benefit of spreading knowledge globally, but the students can also have difficulty finding jobs back home.

"At the beginning they come here thinking there are hundreds of banks and employees," said Alaeddin, who teaches risk management and sharia auditing at Universiti Kuala Lumpur.

(The Star Online / 29 Oct 2013)


---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com Islamic Investment Malaysia: www.islamic-invest-malaysia.com

MBSB, unit plans RM7b Sukuk programme

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) and its unit plan to undertake up to RM7bil Sukuk programme.
MBSB said on Monday it proposed to set up a 15-year structured covered Sukuk commodity Murabahah programme of up to RM3bil which is part of its fundraising exercise.
It also said its unit Jana Kapital Sdn Bhd proposed to set up a 16-year Sukuk commodity Murabahah programme of up to RM4bil.
MBSB said it holds the shares in Jana Kapital on trust for a charitable organisation.
“The proposed establishment of the Sukuk Murabahah programme is to facilitate the issuance of structured covered Sukuk under the structured covered Sukuk programme,” it said.
MBSB said the two programmes were approved by the Securities Commission via its letters dated Oct 25.
(The Star Online / 28 Oct 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Alfalah Consulting's facebook