While the financial meltdown may have painted a universal picture of gloom and doom in the conventional banking arena, on the fast growing Islamic finance (IF) front the mood is one of cautious optimism.
It is generally felt that Islamic banks adhering to the sharia banking code have weathered the financial crisis with commendable fortitude because of its practice of staying away from investing in toxic assets that have taken such a heavy toll on the global banking system.
While Islamic banks have emerged from the crisis virtually unscathed, conventional banks in the US, UK and Europe are bleeding losses of more than US$500 billion with some predicting losses to reach US$2 trillion from the financial market collapse.
The prudence practiced by Islamic banks is believed to have placed IF in good stead with investors looking for safe havens, while at the same time highlighting the strength of Islamic banking and financial methods.
A good indicator of the optimism garnered by the IF sector is the fact that Malaysia is wooing foreign players to create mega Islamic banks capitalized at US$1 billion each, while Kuwait has declared itself keen to be a major player in the IF arena by launching a global expansion drive.
Elsewhere, Singapore and Indonesia are expected to issue about US$900 million of sovereign Sukuk (the Islamic equivalent of bonds) in the first half of this year, while the Standard Chartered Bank—one of the world’s leading banking institutions with a significant presence in Asia and the Middle East—is predicting sales of Sukuk to reach US$10 billion by the end of 2009.
In the Philippines, our banking sources tell us their is gathering interest in Islamic banking, with at least two major banks looking seriously into IF ventures.
So while advocates of IF are not making it out that it is an alternative to conventional banking, it is nonetheless gaining ground as a model for financial institutions, especially in the field of risk management.
However, one concern, which remains a pressing issue and a challenge facing the industry is the lack of critical mass of professionals and expertise with in-dept knowledge and experience in Islamic finance.
The shortage of experienced accounting and finance professionals continues to beleaguer both corporate employers and those in the Islamic finance and banking industry around the world including those who are now aggressively seeking to secure Islamic fund management licenses. This includes experts to interpret shariah law and legal issues in the Islamic finance field.
Filling this breech admirably is the UK based Chartered Institute of Management Accountants (CIMA)—an organization with a reputation for being at the leading edge of business developments—which is the first chartered accountancy body to offer a global qualification in Islamic finance.
Making as pitch for this innovative offering in Manila recently was CIMA President Glynn Lowth who pointed out that the self-study qualification, leading to a “CIMA Certificate in Islamic finance” has been developed in collaboration with the International Institute of Islamic Finance (IIIF) and including input from selected world scholars, advisors and other industry practitioners who have developed and authored the study modules and learning material.
With interest in, and recognition of, Islamic banking fast gathering pace, CIMA (which recently set up a Middle East office in Dubai) is also teaming up with the Monetary Authority of Singapore (MAS) to forge a relationship toward developing the human capital training and development required to tap the Islamic finance global phenomenon.
With the rising demand for shariah-compliant products globally, Singapore is already strategically positioned with existing advantages to capitalize and leverage its financial and banking sectors to a prominent position in Islamic finance.
In another regional tie-up following a successful first year of partnership, CIMA and global banking giant HSBC have agreed to continue their worldwide partnership to promote CIMA’s Certificate in Islamic finance which is available in both English and Arabic.
Link: http://www.manilatimes.net/national/2009/may/21/yehey/opinion/20090521opi5.html
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