Muscat International Islamic Finance Forum publishes key recommendations
- Oman: Thursday, November 08 - 2012 at 10:45
- PRESS RELEASE
To mark the conclusion of the first ever two-day forum on Islamic finance, the organisers have compiled key recommendations which have resulted from the discussions among senior industry figures, global investors, takaful operators, bankers, as well as top Shariah scholars who participated in the event.
•As the industry is in its early stage of development, it is essential to create a solid regulatory framework and incorporate learning from the experiences of other regulators.
•Do not compromise on full transparency and disclosure as best practice ethics are fundamental for this industry.
•Regulators to be flexible in the beginning to allow the industry to pick up as the infrastructure not yet available to the industry & players.
•To explore various legitimate techniques of ijtihad to advance Islamic finance products,
•To enhance Shariah research to enrich the fatwa construction.
•To hold frequent dialogues amongst Shariah scholars to achieve some understanding and resolution.
•To avoid if possible, reliance on commodity murabahah.
Asset Liability Management (ALM):
•Government to assist in developing Islamic short term liquidity instruments to assist absorbing excess liquidity and facilitate ALM.
•Interbank relationship (for all banks - Islamic & conventional) to be encouraged on short to medium term instruments as long as the products are Shariah compliant.
•Encourage regulators to issue licences to downstream institutions such as Islamic finance companies and mortgage issuers, to enhance the deployment of excess liquidity.
•Participate in real supply chain in facilitating liquidity management with credit enhancement.
In-Country Value (Development of real economic sectors & SME):
The main focus of Islamic finance is not just about giving out financing or managing funds, it is also about enhancement of actual economic development such as job creation, infrastructure development etc which facilitate socio-economic improvement in turn. MIIFF advises that:
•Islamic banks should effectively develop SME funds on Musyarakah basis.
•New set of investment deposit IFI (special investment account - not guaranteed- under restricted mudharabah).
•Asset management function of IFI for SME and venture capital or via subsidiaries.
•Tier 1 capital under Basel III through issuance of sukukmudharabah and musyarakah.
•Development of parallel mudharabah product.
•Adoption of Istina/Ijarah Mawsufah fi Dhimmah or Istisna/Wakalah for project-based/asset-based financing.
Asset / Fund Management
•Promote white-labelling and feeder fund approach to expedite development of asset management.
•To have stock exchange undertaking shariah screening and Shariah index.
•To develop fund that invest in strategic services sectors such as education & healthcare, and encourage government participation in such fund (For example: matching fund).
•Regulators to provide incentives and waiving of registration fees/tax on REITS in order to treat REITS just like equity fund.
•Recommend affiliation for Islamic finance courses between educational institutions (private & public).
•Short programmes and professional courses in the short term to bridge the gap in knowledge.
•IFI to invest in structured training to customised to their needs & requirements.
•Takaful to adopt BancaTakaful to expedite distribution.
•Takaful to collaborate with other takaful/asset managers in managing their contributions as the penetration level is still low in short term.
•To promote innovation in sukuk to meet current requirements such as Tier 1 sukuk and perpetual sukuk,
•To tap new markets to address the supply issue.
•To tackle pricing issues to be competitive with conventional banks.
•To consider issuing more asset-backed sukuk as asset-based sukuk face fierce competition from conventional bond.
Media & Awareness:
•To enhance the coverage on Islamic finance to spread the awareness among the public.
•Islamic Financial Institutions to take initiative & be proactive in working with the media to create the awareness about the industry and its products.
•To encourage educational institutions to conduct seminars and host speakers to create awareness among students.
Muscat International Islamic Finance Forum aims towards providing the ideal atmosphere for networking within the Islamic financial alliance in Oman and create a rising consciousness about the manifold benefits of Islamic Finance.
Amanie Advisory House is renowned across the globe to organise seminars and symposia on issues facing the Islamic Finance industry and the way forward for the future.
Key sponsors of MIIFF include (Meethaq), the Islamic banking division of Bank Muscat, (Alhilal) the Islamic banking division of Ahli Bank, the Islamic banking division of Bank Sohar, as well as Al-Madina Insurance; Al-Madina Investment; FWU Global; Gulf International Bank; and many others.
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