Malaysia 2016 | ECONOMY | INTERVIEW

TBY talks to Datuk Syed Abu Bakar Almohdzar, Managing Director of the World Islamic Economic Forum (WIEF) Foundation, on how to expand Islamic finance, halal food, and halal tourism.

 Datuk Syed Abu Bakar Almohdzar
Datuk Syed Abu Bakar Almohdzar is currently the Managing Director of the World Islamic Economic Forum Foundation (WIEF Foundation). He is also an Independent Non-Executive Director of Gas Malaysia Berhad, Sime Darby Motors Sdn Bhd, Allied Hotels and Properties Inc (Canada), Healthway Medical Corporation Limited (Singapore), and King George Financial Corp Inc (Canada). He has held various senior positions in the past: Managing Director of Tradewinds (M) Bhd, Executive Director of Pernas Securities Sdn Bhd, Executive Vice President of Pernas International Holdings Bhd, and General Manager of Pernas Hotel Chain Holdings Bhd.

What are the challenges that the Islamic finance Industry needs to overcome in order to become a global instrument?

In my opinion, the primary challenge of the Islamic finance industry is to attract a wider acceptance from both Muslim and non-Muslim countries. For an industry to go mainstream, we need more players. Raising awareness for Islamic finance is certainly a key focus area of the WIEF Foundation. For example, in London we organized a roundtable in 2012 and hosted the ninth WIEF in 2013. This accumulated effort has resulted in the UK's issuance of a £200 million ($280 million) sovereign sukuk in June 2014, and the orders for the issuance totaled $3 billion, making it nearly 12 times oversubscribed. In addition, the UK has also created an Islamic Index on the London Stock Exchange, launched the first Islamic insurance underwriting agency, developed the Islamic Insurance Association, set up sharia-compliant student and start-up loans, and established the Global Islamic Finance and Investment Group (GIFIG). We are happy with this progress, and would certainly like to emulate this effort in other markets. Another challenge is product innovation. There is an urgent need to create more instruments to serve the need of the 1.6 billion Muslims, as well as the growing demand of Islamic finance products from the non-Muslim communities. It is the Foundation's key mission to continuously engage the world's top Islamic experts to tackle this issue. Currently, Islamic banking assets account for 1% of conventional banking overall, whereas the Muslim population in the world is one in five. In addition, there are still large parts of the world the remains untapped, such as the US, South America, and China. This spells considerable room for growth. It is in this regard that we believe in the importance of the continued promotion and development of Islamic Finance on a sustainable basis.

What needs to be done to realize the potential and the economies of scale for Halal food production?

The halal food industry is projected to be worth $1,626 billion, and its growing demand is believed to be driven by expanding market, increasing disposable income, increasingly sophisticated consumers, focus of innovation and an increase of consumers outside of the Islamic faith who also seek for ethical food. To realize the full potential of the halal food industry, we certainly need to look into standardization efforts such as bringing together manufacturing and logistics companies in dedicated facilities to allow closer and more efficient supply chain integration, oversight and integrity, and developing state-of-the-art tracking and tracing systems for more effective farm to fork monitoring.

What do you think about Malaysia as a destination for Halal travel and are there steps the country can take to win a larger share of the Halal travel market?

Malaysia ranks number one in Crescentrating's top 10 Muslim-friendly travel destinations. Since 2000, the number of Muslim tourists to Malaysia increased from 1.3 million to 5.2 million in 2013. This makes up 20.33% of overall arrivals to Malaysia. Currently, there are 801 flights from Muslim countries flying to Malaysia. Strong air connectivity, with Kuala Lumpur International Airport (KLIA) emerging as one of the fastest growing airports in the world, has been instrumental in attracting foreign travellers. Malaysia is home to many halal restaurants, and our hotels and shopping malls often provide prayers facilities. The growth is highly optimistic. However, I personally do not think that there is a need to differentiate Halal tourism and tourism. If you are a Muslim you know that you can come here and that there are facilities for you, but we do not have to project ourselves for Halal tourism; we simply promote tourism per se, as we want to host people from the other parts of the world. If you to run your tourism offering specifically as a halal destination, you run the risk of alienating other potential visitors for whom that offering is not a primary consideration. Even Japan is working to cater to the Muslim market; it is still tourism, and not exclusively a Halal issue.