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Monday, 14 April 2014

Dubai Seeks to Become Islamic Economic Hub

DUBAI — Mareyah Mohammad Ahmad, a United Arab Emirates student in Dubai, says she plans to start a master’s degree in Islamic finance and banking this fall, following a Dubai government decree published in December that set up a new body for the industry, the Dubai Islamic Economy Development Center.
As part of the emirate’s goal of becoming the global hub of the Islamic economy, the center will provide legal and other services for the Islamic financial industry, including auditing services and an arbitration platform for conflict resolution.
Islamic, Shariah-compliant, finance is growing in both scale and sophistication but there is a catch: Experts say there is a shortage of qualified people to work in the field.
“There aren’t a lot of Emiratis specialized academically in this field, and I had always had an interest in how it works differently from conventional finance,” said Ms. Ahmed, who is studying finance at the British University in Dubai. “I made sure to get work experience in Islamic finance, too, and now if it becomes the capital of the Islamic economy, I should be able to get a good position.”
While general finance degrees and courses are easy to find in the United Arab Emirates, Islamic finance studies have remained limited, even for dedicated students like Ms. Ahmad, hindering efforts by the Gulf state to challenge the established market leaders, Kuala Lumpur and London.
At stake is a substantial and growing volume of potential business. According to a recent report by the ratings agency Standard & Poor’s, issuance of sukuk, or Islamic bonds, is projected to exceed $100 billion worldwide in 2014. That is about the same level as last year, but within that total, double-digit percentage growth is expected in issues by Gulf borrowers, to finance heavy infrastructure spending in the region.
Following the December decree, higher education institutions in Dubai are strengthening their programs in Islamic finance. New offerings include the master’s course that Ms. Ahmad hopes to join, at the British University.
Total Islamic financial assets are growing 17 percent per year and are set to reach a value of $2.67 trillion in 2017, according to Pricewaterhouse Coopers. A recent analysis by Tahseen Consulting, which advises on strategic and organizational issues in the Arab world, forecasts that employment in Islamic financial services in the Emirates will double, to 20,000, in 2015, from 10,000 now.
As the industry has evolved, academia has tried to keep up by offering relevant training. According to a report issued late last year by Thomson Reuters and ICD, the Islamic Corporation for the Development of the Private Sector, more than 530 institutions worldwide now offer courses or degrees in Islamic finance. The U.A.E., in third place behind Britain and Malaysia, has 31 course providers and 9 fully accredited degree providers.
But the jointly produced Islamic Finance Development Report, based on a survey of 60 banks in 15 countries, said that half had reported difficulties in hiring suitably skilled graduates for entry-level positions.
The Emirates has “a long way to go when it comes to quality teachers, diversity and number of programs offered and curricula,” said Abdullah Alshamsi, a business professor at the British University in Dubai. “It’s not all up to academia,” he added. “We have to work together with banks and lawyers and other stakeholders to address the shortage of skills.”
Dubai International Academic City is a free zone for international university campuses. Established in 2007, it has 21 campuses with 20,000 students in over 400 programs. But Ayoub Kazim, its managing director, said, “Historically, the focus on training and education in such a specialized industry has been pretty limited.”
“We are working on that,” the director said, “as we bring together industry experts, government officials and leading academics to identify the existing and emerging skills gaps within the Islamic finance sector.”
Within the banking industry, some institutions are developing their intern programs to provide more hands-on training for students to get practical experience. Emirates Islamic, for example, which has run a summer program for the past five years, expanded it this year to 20 interns from 12.
Still, more is needed. “Employers must dedicate themselves to providing genuine on-the-job training,” said Rashid Mahboob, senior vice president at Dubai Islamic Bank. “We need to work together with academia to nurture the human capital needed to meet the sector’s expected growth.”
Muneer Khan, a partner at the law firm Simmons and Simmons Middle East, who specializes in Islamic finance in London and Dubai, said, “What Dubai recognizes is that the local population is relatively small and the corporate community is not huge, so they want to be able to cater to a wider community as Islamic finance grows in popularity regionally and internationally.”
“Dubai wants to position itself in a way so that the expertise in terms of bankers and lawyers are available here to structure products anywhere in the world,” he added.
Over the past five years, Mr. Khan says, he has received resumés from hundreds of students worldwide who want to join the firm’s Islamic finance team: but while many had academic qualifications, most lacked work experience, he said.
In Britain, there are agreements under which leading law firms pay school fees for a student’s final year after an internship, which allows for synergy between industry and academia. Not so in Dubai, he said: When his firm takes on interns in Dubai, they lack essential skills because academic programs have failed to keep up with the industry.
“If banks, which are the largest potential Islamic finance employers, are saying to universities that students aren’t ready for business, they need to work directly with them to provide the right skills,” Mr. Khan said.
“If this isn’t resolved in the next few years, there will be a really serious problem in the marketplace.”
(New York Times / 13 April 2014)
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