ISLAMIC  FINANCE  HUMAN  CAPITAL  NEEDS:  ISSUES  &  SOLUTIONS    

Assoc. Prof. Dr. Mohamad Akram Laldin Executive  Director,  ISRA  

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Outline

•  Introduc*on  •  Human  Capital  Development:  Issues  •  Human  Capital  Development:  Malaysian  Ini*a*ves  •  Human  Capital  Development:  ISRA  Ini*a*ves  •  Conclusion  

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•  Islamic  Finance  is  a  progressing  industry.  •  Viable  alterna*ve  to  conven*onal  finance.  •  Adopted  across  the  globe.    •  Many  developments  has  taken  place  and  Islamic  Finance  

has  a  lot  of  poten*als.  •  Future  development  is  promising???            à  depends  on  “Human  capital  development”!  

Introduction

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Human Capital Development: Issues

1.  Knowledge  &  Exper*se  gap  in  developing  IBF:  “Shari’ah  trained  scholars“  and  “conven*onal  trained  scholars“.  

2.  R  &  D  in  IBF  development:  Product  Replica*on  vs  Product  Innova*ons  

3.  Industry‘s  demand:  Shortage  of  qualified  Shari‘ah  Scholars  

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•  In  par*cular  to  shari’ah  scholars  the  challenges:  §  Able  to  understand  modern  financial  founda*ons/opera*ons  

§  Able  to  link  and  apply  shari’ah  principles  in  developing  a  viable  Islamic  finance  in  modern  context  

§  Able  to  propose  a  genuine  alternaJve  to  modern  financial  system  

§  Able  to  guide  and  direct  the  Islamic  finance  industry  in  achieving  the  objec*ve  of  shari’ah  

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§  Some  cri*cal  areas  to  be  mastered  by  Shari’ah  scholars:  §  Fundamentals  of  Finance:    

•  Islamic  finance  philosophy/principles/opera*ons  •  Modern  finance  philosophy/principles/opera*ons    

§  Fundamentals  of  Shari’ah:  •  Usul  Fiqh    •  Qawa’id  fiqhiyyah  •  Maqasid  Shari’ah    

§  Contemporary  research  methodological  tools  §  Shari’ah  Governance  &  Risk  §  Shari’ah  Supervision  &  regula*on  

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•  Comprehensive  talent  development  program:    §  Comprehensive  preparaJon  of  human  capital  in  Islamic  finance  industry  

§  Promo*ng  standards  and  the  accreditaJon  of  Islamic  finance  program  by  the  Islamic  finance  industry  

§  Suppor*ng  the  introduc*on  of  structured  training  program  for  relevant  stakeholders  (e.g.,  the  bankers,  judges  and  lawyers)  

§  Dedicated  training  program  to  prepare  Shari’ah  graduates  for  careers  in  the  Islamic  finance  industry.    

SOLUTIONS

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•  In  par*cular  to  shari’ah  scholars  a^empt  should  be  made  to  develop  program  that  could  achieve  the  following  objec*ves:    •  Exposing  the  shari’ah  scholars  to  different  scope  of  Shari’ah  applied  

research  in  Islamic  finance  and  takaful  industry.  •   Providing    a  general  overview  on  the  concerns  and  constraints  of  the  

industry.  •   Strengthening    the  shari’ah  scholars’  capabili*es  in  understanding  ‘illah,  

hikmah  and  jus*fica*ons  of  any  par*cular  hukm  discussed  by  past  Muslim  jurists.  

•   Exposing  and  enhancing  the  the  shari’ah  scholars’  capability  in  dealing  with  resources  in  fiqh,  especially  the  digital  database  (e.g.,  maktabah  al-­‐shamilah).  

•   Enhancing  cri*cal  analysis  on  contemporary  rulings  and  views  related  to  Islamic  finance.  

•  Enhancing  the  shari’ah  scholars’  skills  in  wri*ng  proposal,  report  and  analysis.  

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Global  CollaboraJon  To  establish  strategic  alliances  interna*onal  Islamic  finance  

educa*on  and  training  ins*tu*ons,  such  as  with:    •  The  Islamic  Research  and  Training  Ins*tute  (IRTI)  of  the  

Islamic  Development  Bank,    •  Lembaga  Pengembangan  Perbankan  Indonesia  (LPPI)  of  

Bank  Indonesia,    •  Na*onal  Ins*tute  of  Banking  and  Finance  (NIBAF)  of  

State  Bank  of  Pakistan  •  Others  

SOLUTIONS

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•  Target:  (BNM  Financial  Sector  Blueprint  2011-­‐2020)  §  Enhance  Islamic  finance  knowledge  

proposiJons  to  further  strengthen  Malaysia’s  posi*on  in  Islamic  finance  educa*on  and  training.  

§  To  meet  the  growing  demand  for  Islamic  finance  professionals  that  are  cri*cal  to  research  and  innova*on  efforts  especially  in  the  areas  of  Shariah  and  product  development.  

Human Capital Development: Malaysian Strategies

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•  Fstep  (Financial  Sector  Talent  Enrichment  Programme)    •  Training  for  top  graduates  to  provide  foundation  of  the  financial  services  industry  

•  AIF  (Asian  Institute  of  Finance)    •  Enhance  human  capital  development  in  the  financial  sector    

•  IBBM  (Institute  of  Bankers  Malaysia)    •  Training  provider  for  banking  institutions    

•  MII  (Malaysian  Insurance  Institute)    •  Education  &  training  provider  in  areas  of  insurance  &  financial  services  

Mission:  Establish  institutions  for  talent  development  agenda  within  the  financial  sector,  particularly  in  Islamic  banking  and  finance  industry  

Human Capital Development: Malaysian Initiatives

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•  IBFIM  (Islamic  Banking  and  Finance  Institute  Malaysia)    •  One-­‐stop  Islamic  finance  reference  centre  for  the  industry  &  academia  

•  INCEIF  (International  Centre  for  Education  in  Islamic  Finance)    •  Build  talent  &  skills  in  Islamic  finance  for  practitioners  &  graduate  programmes  

•  ISRA  (International  Shariah  Research  Academy)      •  Promote  applied  research  in  Shariah  &  Islamic  finance  

•  SIDC  (Securities  Industry  Development  Corporation)    •  Capital  markets  education,  training  &  information  resource  provider  in  AS  EAN  

•  ICLI  F(  International  Centre  for  Leadership  in  Finance  )    Leadership  &  Governance  Centre      •  Training  for  senior  management  in  strategic  &  leadership  management      •  Financial  Institutions  Directors’  Education  Program  

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ObjecJves:    •  Spearhead  and  conduct  applied  shari’ah  research  in  

islamic  finance  •  Enrich  resources  of  knowledge  in  islamic  finance  •  Provide  avenues  for  the  development  of  shari’ah  prac*ce  

in  islamic  finance  •  Propagate  harmonisa*on  and  mutual  respect  in  islamic  

finance  prac*ces  

ISRA Initiatives

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PROGRAM:  •  Talent  Development  Program  (TDP)    

 Aim:  to  Enlarge  the  pool  of  Shari'ah  scholars  who  are  well-­‐equipped  with  the  necessary  knowledge  and  competencies  in  both  Shari'ah  and  Islamic  finance.  

•  Intensive  Training  on  Applied  Shari’ah  Research  in  Islamic  Finance      Aim:  to  Prepare  a  competent  shari’ah  researcher  capable  of  analyzing  the  current  state  of  affairs  of  industry,  conduc*ng  research  and  applying  appropriate  tools/methods  in  solving  the  problems  faced,  addressing  the  present  needs  in  industry  as  well  as  in  developing  Islamic  financial  products.  

•  Shari’ah  research  grant  &  Shari’ah  scholarship  award      Aim:  to  enlarge  the  pool  of  Shari'ah  scholars  by  enhancing  knowledge,  research,  talents,  and  intellectual  discourse  in  the  field  of  Shariah  and  strengthening  the  development  of  the  Islamic  financial  industry.  

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Conclusion

•  Islamic  Finance  is  a  promising  industry  that  has  a  bright  future  

•  Con*nuous  human  capital  development  is  necessary  •  Effort  should  be  exerted  in  this  cri*cal  area  in  developing  

a  viable,  solid  and  sustainable  Islamic  finance  industry