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Monday, 16 June 2008

Call for unified Shariah board

DUBAI — A unified Shariah board at national and international levels is necessary to encourage development of Islamic finance instruments, as it will give wider acceptance and diversity to investors, an expert on Islamic banking said.
UAE share in Islamic banking assets by market value is around 33 per cent while Saudi Arabia contributes 24 per cent, revealed Alpen Capital Managing Director Sanjay Vig during a recent banking summit in Dubai.
“It is expected that Saudi Arabia to lead region by 2010 with 52 per cent share and the UAE with 24 per cent. Islamic banking assets grew three-time faster than conventional banking assets over the last five years,” informed Vig.
Takaful products reached $2.5 billion in 2007 and it is expected that by 2015 it will touch $7.5 billion, he added.
A lot of work has to be done for Islamic finance, as there are so many challenges. The key areas, which need attention are institutional research, focus on debt-based financings and specially standardisation, said Ghazanfar Naqvi, Director, Islamic products, Saadiq, UAE.
Research played an important role for Islamic financial industry and it is even more important. There are three types of research in Islamic finance i.e. financial & regulatory research, Shariah research and market research, Naqvi informed the summit participants.
There are a number of stakeholders whose innovation in the product development process is extremely essential. Those are internal and external stakeholders. Former are IT systems and support department and later are central banks, law firms, accounting firm and independent bodies. Central banks can help market standardise and they are also trying to play key role. A few of law firms understand Islamic finance. They know law very well, but less Islamic finance.
There are a number of factors, which affect products' marketing i.e. market perception, product management and service delivery as customers look for consistent service.
“Malaysia is currently the leading in Islamic Real Estate Investment Trusts (IREITs) issue market. The real estate boom in the Middle East will lead to increased demand for IREITs. Although IREITs do not exist in Indonesia and China, demand could be significant in the future, informed Vig.
Central Bank of Bahrain (CBB) is the first Islamic financial regulator in the world while Oman does not allow Islamic banking, said Vig.
At present, Pakistan and Indonesia are small in context of Islamic banking, but they have potential for significant growth in future.

(Khaleej Times)

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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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