Islamic Finance Malaysia

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)


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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)

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

Malaysia's Maybank launches Islamic asset management unit

The Islamic asset management sector is gradually making a comeback after years of stagnation, having seen a total of 88 funds liquidated globally in the past two years as slumping equity markets reduced investor interest.

Firms such as Britain's Threadneedle Investments, which set-up in Malaysia this month, now plan Islamic funds that screen their portfolios following religious guidelines such as bans on tobacco, alcohol and gambling.
The new unit would leverage the Maybank group's network of business lines, which range from consumer banking to Islamic insurance, as well as its geographical presence across Asia.
"The missing link within the Maybank group is Islamic asset management," Nor Azamin Salleh, chief executive of Maybank asset management said on Tuesday.
The new unit aims to launch Asian-themed investment funds using a bottom-up investment strategy, with products to be marketed primarily in Malaysia and Indonesia, Salleh said.
"We are looking at trying to bring an ASEAN plus North Asia product. Our approach is more on the ground, a bottom-up approach," he said.
Earlier this month, Maybank acquired Indonesian asset management firm PT GMT Aset Manajemen, and it would also explore opportunities in the Middle East through Maybank Investment Bank's stake in Saudi Arabia's Anfaal Capital, Salleh added.
(Reuters / 29 Oct 2013)

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

Monday 14 October 2013

Malaysia, UAE Tie Up To Boost Economic Ties, Islamic Finance

The central banks of Malaysia and the United Arab Emirates signed a pact on Friday to foster closer economic ties between the two countries, including in the area of Islamic finance.

The pact signals stronger cooperation between the two financial hubs, which held a combined $181 billion in sharia-compliant banking assets as of 2011, despite growing competition for a share of Islamic business.

Governors of both central banks signed the memorandum of understanding on the sidelines of the International Monetary Fund and World Bank annual meetings in Washington.

It follows stronger cooperation between the Islamic finance centres, in particular the Gulf and Southeast Asian regions, despite traditional differences in the design and implementation of sharia-compliant financial products.

Both central banks are key backers of the Malaysia-based International Islamic Liquidity Management Corp, an institution tasked with addressing a shortage of interbank lending products for Islamic banks.

Last year, Malaysia’s securities commission revised its guidelines for screening equities that qualify for Islamic investment, moving them closer to the approach used in the Gulf.

The global Islamic banking industry is expected to tip $1.3 trillion by year-end. It follows religious principles such as a ban on interest and pure monetary speculation.

(Gulf Business / 14 Oct 2013)

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

Friday 11 October 2013

Malaysia: Islamic finance laws reviewed

KUALA LUMPUR: The Law Harmonisation Committee Report 2013 released yesterday documents the current phase of the committee’s initiatives since its inception in 2010.
The high-level committee has been set up to review, harmonise and further strengthen the legal infrastructure to facilitate the conduct of Islamic finance in a bid to reinforce Malaysia’s leadership role in building and maintaining a solid foundation for the development of Islamic finance.
The committee has a mandate to recommend legal reforms that will advance the development of Islamic finance and achieve greater certainty and enforceability of Islamic finance contracts domestically.
A total of nine issues concerning 17 laws were reviewed, it said in a press release. And after extensive consultation and research, recommended amendments were made on four issues, which have been escalated to the relevant Government ministries, departments and agencies.
The first recommendation is to introduce provisions in court rules on the imposition of late payment charges on judgement debts in Islamic financial cases as permitted by the Syariah Advisory Councils of Bank Negara and the Securities Commission.
Further, allowing better access to financing, particularly Islamic financing, for consumers where it involves the charging of reserve lands through recommended amendments to reserve land legislations at all states has also been recommended. Next, the committee will look into facilitating Islamic financing involving landed property through the recognition of Islamic finance in the National Land Code 1965.
And finally, it recommends facilitating the introduction and usage of innovative and more globally accepted Syariah-compliant product structures for the Islamic money market through appropriate modifications in the Companies Act 1965 that would enable a more efficient conduct of collateralised commodity murabahah transactions.
The first recommendation has been fully implemented, while the remaining are in the process of being implemented.
The committee is headed by the former chief justice Tun Abdul Hamid Mohamad.
( The Star Online / 08 Oct 2013)

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

Thursday 3 October 2013

Singapore and Malaysia urged to collaborate on Islamic financing

SINGAPORE: Singapore and Malaysia should look for more cross-border opportunities to collaborate on Islamic financing.
This is according to speakers at the inaugural Islamic Finance Services Conference on Tuesday.
Experts said Singapore should also widen its breadth of Islamic finance products to cover the areas of retail, real estate and equities, in order to spur growth in this area.
Malaysia is the world leader in terms of Islamic financing, making up about 30 per cent of the more than US$1 trillion worth of global assets in Islamic finance.
As for Singapore, the growth momentum in Islamic financing continued unabated even when certain tax incentives expired earlier this year.
In Budget 2013, the Singapore Government said it will tax Islamic finance business at the standard 12 per cent rate instead of 5 per cent, the current rate, when the incentive expires on March 31.
Nazmi Camalxaman, associate director of Group Islamic Banking at CIMB, said: "I think Singapore has a lot of potential, especially in terms of Islamic asset management. It is untapped in Singapore. So I think if Singapore plays its cards right and chooses the products and services wisely, it will become a strong player in terms of asset management."
CIMB Singapore has secured about S$400 million worth of Islamic commercial and corporate banking deals this year.
This is almost three times the amount of Shariah-compliant deals the bank transacted last year.
Experts said Singapore must continue to play to its strengths.
Zainul Abidin Rasheed, advisor of the Middle East Business Group at the Singapore Business Federation, said: "Singapore does not have to emulate the kind of moves that Malaysia has because Singapore by itself is a very strong financial sector and we have our own strengths, but there is still room for us to see how we can best tap the growing market in terms of finance, whether from Southeast Asia or the Middle East."
Other ASEAN players are also keen to tap into that growth.
Ariff Sultan, regional director (Asia) at Ideal ratings, said: "Governments and the exchanges have worked together in trying to find a more sustainable growth of Islamic finance in ASEAN.
"There is a common working platform that ASEAN exchanges are coming together to be able to inter-trade within ASEAN and in that space, both also looking at creating Shariah-compliant equities."
Other analysts are anticipating the likes of Singapore, Thailand and Indonesia pushing out such Islamic equities through the ASEAN exchanges platform in the near future. 
(Channel News Asia / 01 Oct 2013)

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

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