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Monday, 16 November 2015

Wanted — Islamic finance specialists

KUALA LUMPUR: Rapid growth in Islamic finance in recent years is pushing up demand for more experts in the field, with the Financial Accreditation Agency (FAA)identifying five key areas in which specialists are urgently needed.
However, programmes offered by local universities now are too generic and provide only a broad-based education on Islamic finance, noted FAA chief executive Dr Amat Taap Mashor in an interview with The Edge Financial Daily.
The industry and its future growth, at the very least, require experts that are specialised in compliance, risk management, governance, audit and the syariah principles guiding all these areas of expertise, he said.
“What is needed now are specialised areas of studies. Currently, if someone wants to specialise in risk management for Islamic finance, the [local] universities might offer only one class on risk management. How is the student supposed to develop the depth of knowledge needed [in] Islamic finance?
“Without a depth of knowledge in syariah principles, how can you design a syariah-compliant product?” asked Amat.
According to the FAA, an independent quality assurance and accreditation body for the financial services industry that is supported by Bank Negara Malaysia (BNM) and the Securities Commission Malaysia, global syariah-compliant assets are expected to expand to US$3 trillion (RM13.20 trillion) in a few years.
Last year, Ernst and Young said it expected such assets to enjoy a global double-digit growth of 19.7% a year until 2018.
On whether there are any specialised programmes offered or developed by tertiary education institutions to fulfil the industry’s needs, Amat said some are being developed, but the results will likely be seen only from 2020.
“Even when we were developing a generic programme, it took us one and a half years. A specialised programme will take a lot more work. The International Centre for Education in Islamic Finance and the International Islamic University, for instance, are in the midst of developing specialised programmes.
He said Islamic finance may be the best tool to battle an economic downturn due to syariah compliancy requiring real assets, granting it stronger fundamentals when compared with speculation-based conventional finance.
“Islamic finance is based on real assets. When you talk about land or a building, there is physical evidence. You are not [merely] talking about market sentiment or speculation.
“When the economy is [facing] a downtrend, Islamic finance can provide a bedrock [for the economy]. That’s why even in Europe recently, they have begun asking if Islamic finance is the solution when the economy is on a downward spiral because the conventional system cannot seem to sustain it.
“This is a good sign for Islamic finance as a whole because there will be great demand for [a] non-conventional market,” he said.
But again, the issue of talent crops up. There is a lack of syariah knowledge among some of its practitioners as they were trained in conventional finance, which may not comply with syariah requirements.
To address this, BNM has tasked the Islamic Financial Institute of Malaysia to conduct professional programmes to equip conventional professionals with a better understanding of syariah principles.
In 2010, the central bank said Malaysia requires at least 40,000 syariah-compliant professionals in the industry by 2020. Currently, it is not known how many such professionals the country has trained.
“Another problem is other countries pinching our graduates. Many of our graduates receive offers from Singapore, Australia, the Middle East and even Europe.
“[However, this can also be viewed] as a good sign. It shows that our programmes are well developed and produce quality talent.”

Still, due to the extra cost in preparing for syariah compliance, many businesses unfamiliar with Islamic finance may have doubts about investing their resources to train syariah-compliant professionals.

(The Edge Market / 16 October 2015)
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