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GLOBAL:
The 2014 IFN Asia Forum commenced yesterday in Kuala Lumpur, welcoming
over 500 delegates to the industry’s biggest annual event. The forum
was inaugurated with an opening keynote address delivered by Professor
Dr Rifaat Abdel Karim, CEO of the International Islamic Liquidity
Management Corporation (IILM), providing an overview of the industry
and IILM’s role in addressing liquidity to stimulate the Sukuk market.
In his speech, Dr Rifaat highlighted issues of financial stability and
economic justice and opportunities in the infrastructure sector, as
well as his expectations of a continued and sustainable increase in
issuances over the coming years.
The first session of the day gathered industry heavyweights to provide
their views and projections of the Islamic finance landscape in 2015.
The panel included Badlisyah Abdul Ghani, CEO of CIMB Islamic; Mohammad
Kamran Wajid, CEO of Emirates Financial Services and Emirates NBD
Capital; Rafee Haneef, CEO of HSBC Amanah; Wasim Akhtar Saifi, CEO of
Standard Chartered Saadiq; and Mohammad Faiz Azmi, the executive
chairman of PricewaterhouseCoopers, as the moderator.
On the back of increased participation in the Islamic finance sphere
and new upcoming markets, 2015 was forecast to be “an exciting year”.
The heightening trade volumes between Africa and the GCC were
emphasized as an opportunity for the industry, as well as the need to
bridge the gap between Asia and the Middle East. In terms of the
Islamic debt capital market, international issuances are expected to exceed
domestic offerings in the long run. Nonetheless, issues such education
and prejudice against Islamic finance still remain vital areas to be
addressed for the harmonization and continual advancement of the
industry.
The second keynote address was delivered by Khaled Mohammed Al Aboodi,
CEO of the Islamic Corporation for the Development of the Private
Sector (ICD), the private sector arm of the IDB. In his speech Khaled
elucidated on the dearth of financing instruments and facilities for
the private sector and the lack of new long-term financing products
available thereto. Watch out for our exclusive cover interview with
Khaled in this week’s issue of Islamic Finance news for more news
on the upcoming activities of the ICD.
The regulatory roundtable discussed various issues surrounding the
industry’s regulatory environment. One of the highlights of the
discussion was the potential of Hong Kong’s upcoming Sukuk paving
inroads into mainland China, as pointed out by Daryl Ho, the head of
market development at the Hong Kong Monetary Agency. The harmonization
of Shariah standards through consistency and clarity was also a point
of debate during the regulatory session. As a start, it was suggested
that regulators could work towards establishing standardization for
Sukuk structures.
During the presentation segment, Jawad Ali, the managing partner at
King & Spalding, critically analyzed the true meaning of industry
innovation and its vital correlation to the objectives of Islamic
finance.
In a discussion on Sukuk and Asian Islamic capital markets, panel
members provided valuable views both for and against the case of
further innovation; on what, exactly, could and should be considered
innovation in the area of Sukuk; and where, if at all, further innovation
within the market could make an impression. Khalid Howladar, the global
head of Islamic finance at Moody’s, made the bold claim that no
innovation was needed in the Sukuk market at the moment. Instead, the
industry needs to focus on the basics to develop critical mass and
increase supply to meeting the expanding demand.
The IFN Asia Issuers Roundtable saw the meeting of industry goliaths to
discuss the success factors of their most prominent deals: namely Sukuk
issuances from Khazanah Nasional, Cagamas and FWU Global Takaful
Solutions. Sohail Jaffer, the deputy CEO of FWU, revealed that there
are a number of corporates in Europe currently highly reliant on bank
funding; and while these companies have tangible assets, the problem
lies in the fact that they lack the expertise to build the alternative
financing route. He suggested that governments should form a
specialized advisory group to assist these corporates to access an
alternative financing base and tap outside the European market, which
could potentially open up the European market to Sukuk issues.
In the final session of the issuer’s day, distinguished market players
engaged in a lively discussion on resolving key regulatory, risk and
Shariah issues facing the industry. A resounding consensus among our
panel of experts concluded that the Islamic finance and banking
industry needs to be treated on par with its conventional counterpart;
and needs to grow in strength and depth to be able to mold itself a
separate regulation akin to Basel III. Regulations must produce the
same end results for Islamic financial institutions as they do
conventional, but at the same time, recognize that the underlying
structures are different.
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