KUALA LUMPUR: The shortage of high-quality sukuk in the Islamic finance market is a result of the deficit in virtuous talent, a gap that must be filled fast for Malaysia to remain as the front runner in the industry, globally.
Former Malaysian Institute of Accountants (MIA) president Datuk Mohammad Faiz Azmi said this could pose a great threat to the future growth of the industry as well as limit the potential advancement in the sukuk market.
“Islamic banks don’t have enough high-quality assets to invest in. If the instrument is below than the BBB-rating, they can’t invest in it because they want to preserve the principle value,” he said.
Mohammad Faiz also said there was a lack of safe assets at present, leaving issuances by Khazanah Nasional Bhd or the government, always oversubscribed.
On the future of global sukuk issuance, Mohammad Faiz believed the opportunity now existed for the issuance from Indonesia, which has a lot of infrastructure plans such as to build more roads, have trains, ports, better airports and others.
“When you want to have international investors to invest in (your country), it has to be something that they can understand, a project that makes sense especially from the tax point of view and accounting purposes,” he added.
Mohammad Faiz urged players in the local Islamic finance to work together in nurturing and building a talent pool to create a better environment, thus help increase the industry’s contribution to the economic growth as a whole.
“Currently we have many people very interested in the industry, but their knowledge is very shallow,” he pointed out.
In a recent Bank Negara strategic paper, the central bank revealed that the annual growth rate of the Islamic finance industry had slowed from 24.2% in 2011 to 8.2% last year.
Mohammad Faiz said MIA has launched the Mini Pupillage Programme to create a pool of knowledgeable and specialised talents in the area of Islamic finance, which would contribute to their respective organisation and industry. — Bernama