October 12, 2009 18:40 PM

Malaysia To Help Qatar In Islamic Finance Resources

From Premalatha Jayaraman

DOHA, Oct 12 (Bernama) -- Malaysia will offer two scholarships to eligible Qataris to pursue the Chartered Islamic Finance Professional programme at the International Centre for Education in Islamic Finance in Kuala Lumpur next year.

The Raja Muda of Perak, Raja Dr Nazrin Shah, in announcing this today, said two research grants would also be awarded to Qatari researchers by the International Syariah Research Academy for Islamic Finance.

"The availability of a significant pool of human resource with sufficient knowledge of Islamic finance is crucial to the continued growth of innovation in the industry and we can make great strides if we join forces," he said.

He was speaking at the Malaysia-Qatar Business Forum, held here in conjunction with the Malaysia International Islamic Finance Centre (MIFC) roadshow to Qatar and Bahrain.

Raja Nazrin, who is also the financial ambassador to the MIFC initiatives, led the roadshow delegation comprising regulators and industry players.

He said although Islamic finance has so far remained on the sidelines in the wake of the global financial crisis, it was relevant to reflect on its potential role in helping promote global financial stability.

According to him, the true strength of Islamic finance is derived from the principles of Islamic law or Syariah which prohibit excessive risk-taking.

Syariah injunctions require that financial transactions be accompanied by an underlying productive activity since financial institutions are not allowed to make profit out of lending money, Raja Nazrin said.

"These principles have made Islamic financial institutions less vulnerable to instability and having the capacity to manage the risks associated with a more deregulated and liberalised environment," he said.

Raja Nazrin said Malaysia has taken steps to reform its financial system since the Asian financial crisis.

He said the regulatory and supervisory oversight has been significantly improved with greater corporate governance and improve risk management practices.

The presence of a strong Islamic finance sector alongside conventional finance has also contributed to Malaysia's capacity to weather shocks to the financial system, he added.

As part of the effort to integrate Islamic finance into the international financial world, Malaysia established the MIFC in 2006.

Raja Nazrin said Malaysia has already established itself as a premier centre for the origination of Islamic bonds or sukuk.

It also fast-becoming a hub for Islamic fund management services, international Islamic banking services and international takaful and retakaful, apart from being a centre for Islamic finance education, training, research and consultancy, he said.

As of March 10 this year, Malaysia has liberalised 27 services sub-sectors including health, tourism, transport, business services, information technology (IT) services and legal services with no restrictions imposed on foreign equity ownership.

Raja Nazrin said the liberalisation of the legal services sub-sector allows for up to five international law firms with expertise in the international Islamic finance to establish offices in Malaysia.

He said as part of the liberalisation of the services sector, there are new opportunities for foreign entry into the Malaysian Islamic financial sector.

Raja Nazrin said Malaysia was offering two new Islamic banking licences and two new family takaful licences to international Islamic financial institutions and investors.

In addition, the foreign equity holding allowed in the Islamic banking institution has been raised from 49 to 70 per cent on the condition that the capital raised is no less than US$1 billion, he said.

-- BERNAMA

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