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Malaysia 2016 | FINANCE | INTERVIEW

TBY talks to Dato' Dr. Adnan Alias, CEO of the Islamic Banking and Finance Institute Malaysia (IBFIM), on supporting the bonds segment, training Malaysian workers, and the country's prominent role in global Islamic finance.

Dato’ Dr. Adnan Alias

IBFIM operates as an industry-owned institute. How does this dictate both the financing and the operations of the institute?

IBFIM is unique and quite different from any other Islamic finance support institution in the world. IBFIM is an industry-owned and regulator-linked institute. The key stakeholders are the regulator, the Islamic finance industry players which transcend sub-sectors like commercial and investment banking, development banking, Takaful, Retakaful, Takaful brokering, capital markets, and wealth management. IBFIM's charter dictates that the regulator and all related industry associations are represented on IBFIM's board, and a board meeting could only be convened with the presence of the regulator's representative. That goes to show the kind of commitment that the Malaysian Central Bank—Bank Negara Malaysia (BNM)—has to the promotion of Islamic finance. There are no corporate membership fees or annual financial contributions by the stakeholders to finance IBFIM. Independently, IBFIM has to be financially sustainable. For that, IBFIM offers not just training but also consultancy, Shariah business advisory (where IBFIM controls more than 40% share of its specialized market), event management, and knowledge management; IBFIM is a full-fledged publishing house specializing in Islamic finance titles, and also an active player down the publication value chain acting as distributors as well as retailers to Islamic finance publications.

It is estimated that IBFIM has trained 32% of the workforce in Malaysia. What developments are in place to increase this percentage? Could this include any potential collaboration with global financial institutions?

That was five years ago, but since then we have restrategized. Market dynamism dictates that the percentage of Islamic workforce is very fluid, and talents are shared between conventional and Islamic sectors. With the industry practicing shared resources, the fact that Islamic finance is made up of four main sub-sectors or specializations, and new growth areas are emerging, double-counting becomes ineluctable. IBFIM defines the Islamic finance talent development border now. After all, that is what leaders are for. In that new expanded space, IBFIM has increased its role and maintained its lead. To again increase the momentum, IBFIM did collaborate with other global institutes, associations, and financial institutions. NIFTI (Network of Islamic Finance Training Institutes) with more than thirty affiliates globally, is an example.

Malaysia has the highest number of sukuk issuances. What do you perceive to make these sukuk so attractive for businesses?

To the issuers, tax incentives and bigger investor base, including fund managers, are the pull factors, though the motivations may differ. To the investors, variegated offerings in the forms of type and tenure, and the growing secondary market are motivations enough. In the years to come, the global sukuk market is one area of Islamic finance that will be interesting to watch.

Malaysia sits second, only behind Iran, in the Islamic Finance Country Index. How can this gap be closed on the global industry leader?

I believe Malaysia is happy to be where it is. It is not the ranking, but the fulfillment of what is Shariah and innovating along the way. Structurally, the industry differs from country to country. Malaysia believes in growing together in shaping Islamic finance and creating more vibrant marketplaces, not in overtaking or leading any jurisdiction. Within our own industry structure, we know what we want to do next. BNM had come up with a good blueprint for the next ten years, and we are now witnessing changes and initiatives along the way. The recently introduced Islamic Financial Services Act 2013 (IFSA), for example, is an initiative in the right direction. Already we are witnessing the industry players adapting and the industry advancing.

What is your outlook for the development of the IBFIM over the coming few years?

IBFIM supports the BNM's Financial Sector Blueprint and is aware of its mandate spelled out in the Blueprint. IBFIM strives to fulfill the mandate. Among others, IBFIM now is actively looking into Islamic wealth management, though the sub-sector is still in its infancy and the challenges are daunting. Other new growth areas have been identified, and IBFIM is now pursuing them. Malaysia is pursuing professionalism in talent development, and BNM has put the mechanisms in place. It is time to deliver now. IBFIM has lined up at least three professional qualifications now: the Chartered Islamic Banker (CIB), Chartered Takaful Practitioner (CTP), and Chartered Islamic Development Banker (ChIDB). This is in addition to IBFIM's other industry qualifications like the Certified Qualification in Islamic Finance (CQIF). By extension, then, the next logical thing to do is to bridge the university-industry gap. IBFIM has a head start on this. Finally, to achieve a quantum leap, IBFIM needs to redefine its business model in the realm of information and knowledge as the next business frontier.