In a joint effort to support the development of Islamic financial services industry, the Islamic Research & Training Institute (IRTI) of the Islamic Development Bank (IDB) Group, and CIMB Islamic Bank Berhad of Malaysia have signed a memorandum of understanding towards developing Islamic Finance Country Reports (IFCR) on Malaysia and Indonesia. The IFCR is expected to provide in-depth information, and independent due diligence to facilitate the growth and development of the Islamic finance industry in IDB Group member countries and encourage investment by enhancing transparency.
According to Dr. Badlisyah Abdul Ghani, CEO of CIMB Islamic Bank, “Stakeholders within the industry need to be adequately equipped with necessary knowledge and better understanding to steer the business towards new directions within the Islamic finance industry.” He added IFCRs will provide the industry with valuable knowledge resources towards enhancing the Islamic finance industry and cater to the growing number of customers in the real economy through well-structured, sustainable and innovative products and services.
Prof. Dr. Mohd Azmi Omar, Director General of IRTI, said that the IFCR will analyze the success story of the Malaysian Islamic finance industry and provide the lessons learnt to other IDB member countries. Through this combined initiative, the two institutions aim to facilitate access to information that is currently not available to stakeholders and thereby contribute to the growth and development of the Islamic finance industry. Apart from helping to increase investor confidence, the reports will facilitate better understanding among regulators, market players, academicians, students and other stakeholders.
The upcoming IFCR for 2014 is dedicated to Malaysia, which is a leading international and regional hub for Islamic finance in the Asian region. The Malaysian Islamic banking sector with 13 per cent share of the total global Islamic banking assets, has continuously outperformed the conventional banking sector with average annual asset growth rate of 18.6 per cent during 2008-2012 while the conventional banking grew at 9.3 per cent for the same period.
The Islamic banking assets in Malaysia are estimated at over $132 billion. Regionally, Malaysian Islamic banking assets represent over 85 per cent of the total Islamic banking industry in Southeast Asia. Globally, with diversified Islamic financial products and services, consistent development in regulatory framework and enhanced international linkages are pushing the industry’s fast growth. Shari’ah-compliant assets worldwide are estimated to be in excess of $1.7 trillion and growing at 15-20 per cent annually.
Indonesia’s Islamic banking assets, meanwhile, grew by 24.2 per cent to IDR 242.3 trillion ($21.4 billion) in 2013. With a predominantly Muslim population (240 million), Indonesia’s potential in this sector is yet to be fully exploited. However, Islamic finance activities are gradually making inroads which could help it tap the country’s large consumer base.
IRTI is mandated by the IDB Group to inspire and deliver innovative research, capacity development, advisory and information services in the areas of Islamic finance and Islamic banking.
Originally published on www.cpifinancial.net