Opening Remarks by Mr Danial Mah Abdullah, Director-General of Labuan FSA at Industry Opportunities In Islamic Finance
Industry Opportunities In Islamic Finance
Opening Remarks By

Mr Danial Mah Abdullah
Director-General, Labuan FSA

3 October 2019
Universiti Malaysia Sabah, Labuan International Campus


Prof Madya Dr. Lee Hock Ann
Deputy Dean of Labuan Faculty of International Finance, Universiti Malaysia Sabah (UMS),

Mr. Yusry Yusoff,
Chief Executive Officer of Islamic Banking and Finance Institute Malaysia (IBFIM),

Mr. Ijlal Ahmed Alvi
Chief Executive Officer of the International Islamic Financial Market (IIFM),

Ladies and Gentlemen,

Assalaamu’alaykum Warahmatullahi Wabarakatuh and good morning.

It is my great pleasure to be here this morning at this session on “Industry Opportunities in Islamic Finance”. On behalf of Labuan FSA, I wish to extend our gratitude to UMS for its collaboration to make this event a success. This intellectual discourse serves as an important bridge to connect our students with the industry players in international finance particularly in international Islamic finance. Underpinned by its intrinsic stability features and ethical dimensions, Islamic finance is recognised as a more equitable model that would foster financial stability with sustainable growth. For the university students who are present here today, you are the next generation of young talents who will carry the torch for advancing this global sustainable growth agenda. Hence, in preparing for the future, a future that is going to be different from the current environment, you need to be equipped with the required knowledge, skills and expertise. This entails understanding the practical aspects of Islamic financial transactions in addition to your academic studies. It is hoped that today’s effort by IBFIM, UMS and IIFM will contribute to broaden your horizon on the practical industry applications of Islamic finance in the real world of international finance. For the Labuan industry players, you can also benefit from today’s engagement to enhance your awareness on the training and certification programmes provided by IBFIM as well as on the documentation standards developed by IIFM. Hopefully, this will raise the bar on the standards of technical competency and professionalism in Islamic finance.

Ladies and Gentlemen,

Islamic finance has grown from strength to strength from its humble beginnings despite bracing through the turbulence of global financial crises over the past three decades and not to mention its own internal challenges. Alhamdulillah Islamic finance has emerged stronger with the global Islamic financial services industry estimated to be worth USD 2.19 trillion in the second quarter of 2018 . Shariah-compliant assets were only around USD 200 billion in 2003 but today they are forecast to reach USD 3.8 trillion by 2023, based on an average annual growth of 10% . Islamic finance is also offering viable and competitive financial solutions to drive new avenues for growth such as in the fintech, digital banking and sustainable finance space. This showcases the capability and sophistication of today’s Islamic finance industry.

Notwithstanding this, on a global scale, the industry is still small, representing just one percent of global financial assets. Furthermore, most of these assets are located in a few Gulf Cooperation Council (GCC) countries, as well as Iran and Malaysia. This means that there is huge growth potential and opportunities for Islamic finance. To tap on this huge potential, our students and industry practitioners need to continuously upscale their technical expertise and skill set in Islamic financial transactions and contracts.

This can be facilitated through structured learning provided by the Islamic Banking and Finance Institute Malaysia through its certified qualification and online learning programmes. In addition, it is important to complement structured learning with practical aspects of business including having talk sessions like this with industry experts and practitioners.

In this regard, Labuan FSA has invited Mr. Ijlal, CEO of the International Islamic Financial Market or IIFM, an international standard-setting organisation which is based in Bahrain to provide the practical aspect of facilitating Islamic financial transactions. He will share his expertise in developing standardised Islamic financial contracts and the opportunities they present for the industry players in growing their Islamic financial business.

The IIFM, of which Labuan FSA is a founding member, has played a pivotal role in facilitating the harmonisation of the Islamic finance industry by producing globally standardised Shariah compliant financial documentation and product confirmations. Its stature in international Islamic finance has grown over the years and is recognised as a market leader in the Islamic capital and money markets among regulators and industry players globally. IIFM has so far published standards catering to liquidity management, hedging, margin maintenance and trade finance participation. The focus now is to develop standard documentations for Sukuk Al Ijarah and Sukuk Al Mudarabah which are critical standards for the Islamic capital markets. The IIFM Standards are developed with the directions of its Board, in consultation with legal and industry experts as well as with the guidance of distinguished Shariah scholars from ten different jurisdictions. Hence, these Standards offer Islamic financial institutions a complete set of widely accepted and legally robust financial documentation and product confirmations, bringing enormous benefits to the institutions in terms of significant cost reductions, ease of execution and greater transparency, consequently leading to increase in transactional volumes. These are the practical aspects of Islamic finance that students in Islamic finance need to be aware of. That is why today’s event will be a useful avenue for students and industry practitioners to better equip themselves through this knowledge enhancement in standardised documentation for Islamic financial transactions.

Ladies and Gentlemen,

On that note, let me once again thank the UMS, IIFM and IBFIM for making this seminar a success, and to quote Imam Al-Ghazali, the famous medieval Muslim philosopher who said, “Those who look for seashells will find seashells; those who open them will find pearls.” Well, I hope we will all be able to find our pearls today. I wish you a productive engagement ahead. Thank you and Wassalaamu’alaykum Warahmatullahi Wabarakatuh.

Mr Danial Mah Abdullah
Director-General, Labuan FSA
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