Coordination alone does not translate into smooth inter-country transactions, says council
By SHAHEERA AZNAM SHAH / Pic By AFIF ABD HALIM
Implementing widely accepted practices and coordination are key to fostering seamless cross-border transactions between Islamic financial institutions.
General Council for Islamic Banks and Financial Institutions (CIBAFI) secretary general Abdelilah Belatik said coordination alone does not translate into smooth inter-country transactions without a framework.
“Harmony in framework and practices is a challenge as different countries have different financial landscapes. CIBAFI does not recommend duplicating the exact model in every country, but to build a framework around the existing model,” he said at a member’s strategic session last Friday.
“We think by implementing the right standards that are globally accepted, it will help in removing divergent practices and it is the key to cross-border transactions such as sukuk issuances and currency transactions,” he said.
In raising the bar of global Islamic finance (IF), Abdelilah said collaborations between CIBAFI members will benefit countries with newly formed IF industry.
“CIBAFI is an association of 120 members from 30 countries. We think the industry can leverage on the collaborations between our members in coordinating and executing the right framework, standards and practices.
“We want to bring these countries together as they have varied levels of experience in IF. Some countries have 30 years of experience, and some countries have just started. CIBAFI will be the platform for countries to work together to improve Islamic financing,” he said.
Abdelilah said countries with enhanced regulatory framework and practices such as Malaysia and Sudan can be a reference point for nations with newly established Shariah-compliant environments.
He said countries with advanced IF environments can show their leadership and assist countries with smaller IF assets.
“Malaysia has attractive infrastructure and regulations as Bank Negara Malaysia and Securities Commission Malaysia have always been at the forefront in implementing the best standards,” he said.
“The country’s IF industry started 45 years ago and taking the industry’s best practices will help to harmonise global industry standards,” he added.
Abdelilah said several African countries have started to show an interest in the IF industry due to the hindrances found in conventional banking and the global financial crises.
“More countries are recognising the shortcomings of the conventional finance sector due to high leverage. They see that IF did not suffered as much, as it relies on a mechanism that prevents massive loss to industry players,” he said.
Abdelilah said both Muslims and non-Muslims countries in the African region and Central Asia are next in line to be key players in the IF industry.
“Countries such as Kenya with a Muslim population of 4.4 million, or 10% of its population is keen for the Shariah-compliant market. In Central Asia, the government of Kazakhstan and its central bank is showing interest in developing an IF sector,” he said.