For those in the investment and finance community, the most pressing question is not whether the market for Islamic finance will continue to expand, but whether it can produce enough qualified professionals to keep up with its growth. Complementing its standard-setting Sharia-compliant financial and regulatory institutions, Malaysia boasts the industry’s most respected and sought-after Islamic finance education and training programmes. These programmes have so far welcomed students from dozens of countries, playing a vital role in the development of the industry worldwide.
In a report released this year, the Finance Accreditation Association reiterated the need for an additional 50,000 professionals over the next decade to keep up with the sector’s projected expansion. Citing “unparalleled growth in terms of industry size and value,” the report called for “urgent investment in human capital,” in order for the industry to maintain the pace of its current growth levels, as it endeavours to introduce more sophisticated products while opening up new sectors and markets.
“The Islamic finance sector is expected to create thousands of new job opportunities, further igniting robust economies, hence boosting the industry and establishing global competitive advantages,” comments Dato’ Sri Abdul Azeez Bin Abdul Rahim, Chairman of Tabung Haji (TH). “Many people are not familiar with Sharia-compliant funds. Therefore many countries send their people to Malaysia to get trained in Islamic banking products. With Malaysia being one of the key players in this sector, we believe we could help train many countries on Islamic banking products.”
A centrepiece of Malaysia’s Islamic finance education system, the International Islamic University Malaysia (IIUM) specialises in the marketing and development of new financial products that comply with the industry’s sought-after standards. As a top research and learning centre, IIUM also works to disseminate the knowledge that helps keep the industry moving forward. Working with public sector colleagues in the Ministry of Education, the university has taken the lead in its Entry Point Project – a critical part of Malaysia’s Economic Transformation Programme that targets improving Islamic education.
IIUM promotes a global exchange amongst students through its network with the Federation of Universities in the Islamic World, composed of 300 universities. IIUM also offers online programmes for international students and collaborates with IRTI, the research arm of the Islamic Development Bank.
“We want to position Malaysia as the global training centre for Halal products,” explains IIUM Rector Dato’ Sri Zaleha Kamaruddin. “Through new partnerships we will export programmes internationally,” Ms Zaleha continues. “Currently the UK is the best place to offer such programmes because of the interest that has been created around Islamic finance.”
IIUM is helping to push the boundaries of education, doing its part to create a pool of talented individuals who are in tune with the industry’s needs. “The global trend in education is exploring new frontiers and creating new products. [The objective is to become] an Islamic window to the Western world,” she concludes.
”Being one of the key players in this sector, we could help train many countries on Islamic banking products”
Dato’ Sri Abdul Azeez Bin Abdul Rahim, Chairman of TH |
Due to its intersection with Islamic law and the study of religion, as well as its rigorous compliance standards, the growth in Islamic finance has generated additional demand for holders of advanced degrees. An essential partner in this education effort is the International Centre for Education in Islamic Finance (INCEIF). A postgraduate university created nine years ago, INCEIF’s first course, in 2007, had 33 students from seven countries. Today, INCEIF has 2,500 students from 85 countries; and 619 graduates, all at Masters and PhD level, soon to be 950 by the end of 2014.
INCEIF carries out training programmes for practitioners with the University of East London, attracting the attention of many of the top experts in Islamic finance in the UK, many of whom are lawyers. Seeing this opportunity, INCEIF is launching an arbitration programme next year it believes will provide outstanding business opportunities for participants.
“What London needs are executive programmes with experts, and people with experience in practical issues,” says Daud Vicary Abdullah, INCEIF’s President and CEO. “Training programmes for practitioners is precisely what we are doing with the University of East London, for instance.”
The renewed commitment for Islamic finance in the UK is proof of its good business sense, according to the INCEIF president, who credits the growth in the UK to the size of its financial market and presence of top-notch professionals. “When we started, I needed to go and see people,” he recalls. “Now they come to see me. That is a barometer.”
As the head of INCEIF, Mr Vicary Abdullah has keenly observed Malaysia evolve into its current leadership position. “This is a global marketplace because the expertise is here,” he explains. “There is recognition of the expertise and also an increasing level of influence. That is why the UK comes here for support and advice. We also have a collaboration partnership with the World Bank. The World Bank collaborates with three universities in the world: Harvard, Oxford and INCEIF.”
INCEIF’s president sees the recent global financial crisis as a turning point for the industry, as the failure of the mainstream financial industry sent customers looking for alternatives. “The crisis demonstrated that something was wrong, that ethical values were eroding,” he says. “The trust in the conventional system has been completely lost; the only trusted people are those that came out with an alternative, like Islamic finance.”
Although it still suffers from a lack of understanding, the misconceptions are fast disappearing in the face of the industry’s performance vis-à-vis traditional banking. “Islamic finance makes perfect business sense,” Mr Vicary Abdullah goes on. “Islamic finance is about the efficient and effective mobilisation of capital for the benefit of the real economy. That is the essence of Islamic finance.”
INCEIF aims to continue in its role spreading knowledge about this rapidly expanding market. “The challenge is about people understanding that this is not a threat,” Mr Vicary Abdullah emphasises. “It is something advantageous. It is not about Islam dominating everything; it is practical common sense.”
Education will be key to bridging this gap, he concludes, adding: “We are the benchmark for Islamic finance education. The power of INCEIF is global. We will continue to grow and we are glad that the world looks at us as thought leaders in Islamic finance.”
As one of the world’s largest Islamic financial centres, Malaysia has seen this market grow from just a few banks into dozens of institutions managing hundreds of billions of dollars. With this growth came the need for increased oversight. The establishment of the Accounting Research Institute (ARI) in 2009 represented a sea change in this area. ARI focuses mainly on Islamic Financial Criminology, but it is home to eight research centres, each focused on a different topic, from microfinance to anti-money laundering and counter-terrorism financing.
ARI leans on its international partners like the UK Charity Commission to help it track the flow of illicit money and potential terrorist financing across the globe. At home, it promotes a responsible corporate culture through the Malaysian Institute of Integrity (IIM).
“We have found a way of taking advantage of this niche and are working together with the Ministry of Education towards Islamic financial excellence. In fact if you type Islamic Financial Criminology into any search engine the ARI will come up,” explains Professor Normah Omar, ARI’s Director.
“Prior to the work of ARI, people were not able to get takaful [Sharia-compliant] insurance for microfinance and this means if something happens to the person who took the loan, they are unable to pay it back,” adds Dr Rashidah Abdul Rahman, a Research Fellow and Professor of Corporate Governance and Islamic Finance.
The ARI works hand-in-hand with Malaysia’s educational institutions to promote a culture of ethics and responsibility.
“We are working together with the Ministry of Education towards Islamic financial excellence by streamlining bureaucracy, increasing transparency, and strengthening good governance,” continues Prof Normah. “We are ready to work with British institutions to create new products because the UK harbours innovation, but we are here to clarify the foundations of Islamic Finance and accounting, and work in unison to develop the sector.”
TH’s chairman Mr Azeez adds, “Several countries have approached us to seek our assistance in guiding and knowledge sharing in establishing and replicating TH in their homeland. I believe with the right strategic collaboration and support, we could help make it possible.”
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