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Friday, 10 October 2008

Human Capital Development in Islamic Finance: Special Reference to Malaysia

Present day Islamic finance has grown far from its domestic roots to emerge as one of the fastest growing financial markets in the international field. The rapid progress made in the last 5-10 years points to a growing momentum. Islamic finance now extends beyond the traditional predominantly Muslim economies to become an increasingly important part of the mainstream international financial system with over 300 Islamic financial institutions worldwide across 75 countries.

With demand for Shariah-compliant investments rising from an estimated 1.6 billion Muslims worldwide by 20101, it is projected that the Islamic financial system will soon manage approximately 4% of the world economy 2.

Malaysia’s chronology in Islamic finance began in the 1960s with the establishment of the Pilgrims Fund. This was followed by various initiatives throughout the decades that followed. Notably in the 1980s, Malaysia enacted the Islamic Banking Act 1983 and the Takaful Act 1984 respectively. This paved the way for the creation of Malaysia’s first Islamic bank and first takaful company and thereafter the development of more Islamic financial institutions and the growth of the industry as a whole.

Today, Malaysia possesses one of the world’s most advanced Islamic financial markets, with an Islamic finance system estimated to be worth around USD1 trillion in assets, 5 times greater than in 2003. The nation has the unique distinction of being the world’s first to have a full-fledged Islamic financial system operating in parallel to the conventional banking system, whilst equally placing strong emphasis on human capital development in Islamic finance to ensure the availability of Islamic finance talents.

Recently, the Malaysia International Islamic Financial Centre (MIFC) was selected as the “Best International Islamic Finance Centre” at the 2nd Annual London Sukuk Summit Awards of Excellence.

Complementing this strength is Malaysia’s in-depth experience and solid fundamentals in Islamic finance developed more than 30 years. It is based on this resounding track record that Malaysia offers itself as a base for the development of skilled professionals in Islamic finance.

Experts across the world concur that the sustainable growth of Islamic finance will depend on the availability of ample professional talent to meet the diverse needs of the industry, particularly in the areas of product innovation, research and development and Shariah jurisdiction.

In this regard, Malaysia distinguishes itself through its well defined and advanced Human Capital Development infrastructure. Malaysia has a large and diverse pool of Islamic finance talents, comprising product innovators, regulators, intermediaries and risk managers who have financial and Shariah knowledge and expertise.

Several learning institutions offer a wide range of Islamic finance programmes to develop Islamic finance professionals and cultivate Islamic finance thought leadership.

Malaysian is a well established hub for educational excellent in the Southeast Asian region. The tertiary education sector, in particular, has experienced impressive growth rates in the past decade, and is currently home to 20 public universities (2 of which are Islamic universities), 16 private universities, 4 foreign university branch campuses, and more than 500 other higher education institutions3.

As at year end 2007, Malaysia saw a total of 65,000 students enrolled in international schools as well as private and public institutions of higher education. This represents an increase of more than 30% compared to the previous year. The foreign student population is expected to surpass 100,000 by 20104.With rising demands for more talents in the Islamic finance industry, it is estimated that Malaysia will provide job opportunities for about 12,000 practitioners of Islamic finance in the same year.

Malaysia has been successful in meeting the domestic industry’s demand for talent. Malaysia now looks to share its infrastructure and insights with the world to meet the burgeoning global demand for skilled Islamic finance professionals.

Comprehensive Human Capital Development
  • Malaysia has placed a strong emphasis on human capital development alongside with the development of Islamic finance industry to ensure the availability of Islamic finance talent.
  • A large and diverse pool of Islamic finance talents, comprising product innovators, regulators, intermediaries and risk managers who have financial and Shariah knowledge and expertise.
  • Growing needs of Islamic finance talent by domestic and international financial institutions are made by established learning institutions, which offer a wide range of Islamic finance training programmes to develop Islamic finance professionals and cultivate Islamic finance thought leadership.
  • Six institutions of higher learning in Malaysia also offer undergraduate and post-graduate programmes in finance with a specialisation in Islamic finance.
  • Malaysia offers opportunities for practical experience, research and development. Currently, Malaysia is the only country in the Asia Pacific region that offers such comprehensive human capital development approach in Islamic finance.
  • Malaysia has the capability to “export” its rich Islamic finance knowledge, including personnel, intellectual content, talent for events, workshops and programmes abroad, as well as Shariah advisory and consultancy.
  • Malaysia has helped various tertiary and post-graduate learning institutions establish Islamic finance education in various countries.
  • Generous tax incentives are accorded for talent enrichment.
  • An endowment fund worth USD62.5 million was established to fund the enhancement of knowledge, research, talents, and intellectual discourse in the field of Islamic finance.
  • Facilitative and supportive immigration policies are accorded to encourage expatriates to participate in Malaysia’s Islamic financial industry.

1Source: - Islamic asset set for 25% growth by 2010 (8 April 2008)
2Source: Information Clearing House – Islamic Finance
3Source: Ministry of Higher Education Malaysia
4Source: The Star (Education) – Branding Malaysia (9 March 2008)


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