Malaysia – The International Islamic Financial Centre Issuers & Investors Forum

“We are firmly committed to developing the capabilities in Islamic finance and strengthening the global pool of talent and expertise in Islamic finance to increase the potential for this to happen. As part of the initiative to meet this objective, we have established the International Centre for Education in Islamic Finance, INCEIF, in March this year to offer professional certification programs in Islamic finance, in addition to, Masters and Doctorate programmes. Bank Negara Malaysia has also recently made available a Shariah Scholarship Award and Shariah Research Grant, available to Malaysians and non-Malaysians seeking to pursue research studies in Islamic finance.”

Tan Sri Dr Zeti Akhtar Aziz, Governor, Bank Negara Malaysia , at the Malaysian Islamic Finance Forum. 14 – 15 August, 2006.

`Global Acceptance of Malaysian Islamic Products’ was one of the topics discussed at the recent two-day Malaysian Islamic Finance Forum held in Kuala Lumpur.

Mr Agil Natt, the Chief Executive Officer of INCEIF, was one of the panel speakers at the session on the topic at the two-day Forum themed “ Malaysia – The International Islamic Financial Centre”.

In a session moderated by Bursa Malaysia Chief Executive Officer Mr Yusli Mohamed Yusoff, panelists, amongst others, discussed the need for cooperation between the Shariah practitioners and scholars in the Middle East and Asia when it comes to Shariah-compliant products acceptance.

Mr Agil said: “Convergence is not an issue. Rather than debate on the acceptability, maybe it is best to focus our attention on factors that make an Islamic product more globally acceptable. I say this as the issue of Shariah convergence is repeated too often and for too long in forums and conferences when the industry has somewhat achieved an 80 per cent convergence on Shariah issues.

“This brings to the second point which is Islamic products should cater to the expected returns and risk appetites of investors. Savvy investors are looking for price transparency, liquidity, negotiability and different classes to achieve diversification in portfolios.

“The forces of liberalisation and globalisation will bring sweeping changes to the industry. Islamic banks can only survive if they are well capitalised, invest in research and development, instill strong corporate governance values and global in its operations.”

Mr Agil pointed out that with the participation of well established global players the likes of Citigroup, UBS and HSBC and excess liquidity in the Middle East , the action would be in wholesale products. Private equity and venture capital fund industry need to be developed so that the financing and investment are in the real sector be it manufacturing, aviation, water, energy and many others.

“Overriding these issues are the urgent need to produce the talents and professionals to drive the innovation and competition in the industry. This is the critical mission of INCEIF. This is a global mission. For the industry to fast-track its growth and be integrated in the mainstream financial market, the people factor needs to be solved,” Mr Agil added.

Apart from Mr Agil, Professor Dr Malik Mahmud Al-Awan, Distinguished Professor of Shariah at INCEIF, was also one of the panelists at another session at the Forum.

The session on `Managing Liquidity: Islamic Treasury Products’ touched on the concerns of meeting market expectations, product design and development and learning the mistakes of conventional finance.

The Forum, which was officiated by Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz, was co-hosted by the central bank, Securities Commission of Malaysia, the Labuan Offshore Financial Services Authority (LOFSA) and Bursa Malaysia .

The Forum provided a unique opportunity for issuers and investors to gain insights into Malaysian and international Islamic banking, Takaful and capital markets from local and international practitioners and regulators.

The Malaysian Islamic financial system is now becoming increasingly integrated with the international financial system. It is a vibrant market, with a total of RM 11.6 billion worth of Sukuk approved during the first quarter of 2006. Currently, there is RM 91.6 billion Sukuk outstanding as at 31 March 2006 accounting for 44 percent of the Malaysian bond market. The average monthly turnover of the Islamic money market for 2006 is RM 30 billion. In the equities market, 85 percent of listed securities are Shariah compliant.

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