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Islamic banking's challenges dominate conference

23 November 2005

Issues and challenges facing the global Islamic banking industry dominated last week's International Islamic Banking and Finance Conference organised by Monash University Malaysia.

From left: Mr Kamalul Ariffin Yusof, director of Aldwich-Wipro; Professor Bala Shanmugam; and Mr Vaseehar Hassan Abdul Razack, chairman of RHB Islamic Bank Berhad.

The two-day conference, with the theme 'Islamic finance: the challenges ahead', was opened by Deputy Finance Minister Datuk Dr Ng Yen Yen at the Mandarin Oriental Hotel in Kuala Lumpur.

Conference chair Professor Bala Shanmugam said prominent speakers and industry leaders discussed regulation and supervision, financial innovation, human capital development, financial architecture, Islamic IT solutions and legal and syariah frameworks.

He said the recent phenomenal growth of Islamic banking underpinned the need for greater innovation and flexibility to facilitate wider acceptance of Islamic products and services.

Professor Shanmugam, the chair of accounting and finance at Monash University Malaysia, said the future of Islamic banking looked promising but that would depend greatly on factors including global standardisation and improved regulation as well as the adoption of best practices in Islamic banking and finance activities.

"This conference is timely as it provides a focused platform for researchers, academics and industry leaders to brainstorm issues affecting Islamic banking," he said.

"A major issue that needs to be looked into urgently is human capital development within the local Islamic banking institutions, as the industry is now facing a shortage of qualified personnel."

Professor Shanmugam said with the entry of foreign Islamic banks in Malaysia, local Islamic banking institutions needed to raise the professional capabilities of their bankers to enable the country to compete globally.

"Liberalisation of the Islamic banking sector to foreign players presents new challenges to the Islamic banking industry, and this is expected to lead to greater competition," he said.

RHB Islamic Bank, the main sponsor of the conference, has been actively involved in the development of Islamic banking since its introduction in Malaysia.

More than 200 participants attended the conference, including Professor Rifaat Ahmed Abdel Karim, the secretary-general of the Islamic Financial Services Board; Mr Peter Casey, director, Supervision, Dubai Financial Services Authority; and A. Rushdi Siddiqui, global director, Dow Jones Islamic Index Group.