CAPACITY BUILDING FOR SHARAH SCHOLARS Presentation at 5 th COMCEC - PowerPoint PPT Presentation

ISLAMIC FINANCE TASK FORCE CAPACITY BUILDING FOR SHARĪʿAH SCHOLARS Presentation at 5 th COMCEC Capital Markets Regulators Forum Meeting Istanbul, Turkey 27 October 2016

AGENDA • ISLAMIC FINANCE TASK FORCE – Past & Current Initiatives • CAPACITY BUILDING FOR SHARĪʿAH SCHOLARS  Survey Questionnaires  Survey Findings • KEY FINDINGS AND PROPOSED SOLUTIONS • WHAT’S NEXT? 2

ISLAMIC FINANCE TASK FORCE - Past & Current Initiatives 2013 - 2014 Islamic Finance Task Force published a report on “Enhancing Infrastructure for Islamic Capital Market ” covering: • Legal, Regulatory & Tax Framework; • Sharīʿah Governance; • Products & Services; and • Talent Development. The report highlighted six (6) recommendations. May/June 2015 Organised the Islamic Capital Market Capacity Building Programme in Dubai. The Programme had covered part of the six recommendations. 2016 onwards Following the completion of Dubai’s Programme, the remaining recommendation is Shariah Governance i.e. Promoting continuous professional development for Sharīʿah Advisers 3

CAPACITY BUILDING FOR SHARĪʿAH SCHOLARS Survey questionnaires were prepared and The focus of the Islamic Finance Task Force circulated to COMCEC member countries to gather for 2016 onwards is on Sharīʿah governance, feedback. with main objective to promote continuous professional development for Sharīʿah Respondents Advisers , which is one of the six identified recommendations. No Member Authorities & Organization Country The key objectives under this initiative are to: 1. Autoriti Monetari Brunei Brunei Darussalam • Provide a platform to meet the country’s 2. Autorité Marocaine du Marché des Morocco needs for capacity building programme Capitaux for Sharīʿah scholars; 3. Capital Market Authority Kuwait 4. Capital Markets Board Turkey • Share experiences on Sharīʿah scholars’ 5. Central Bank of Sudan Sudan training initiatives in their respective jurisdictions; and 6. Development Bank of Turkey Turkey 7. National Council of Credit Cameroon • Identify appropriate training 8. Palestine Capital Market Authority Palestine programmes on Islamic finance for 9. Securities Commission Malaysia Malaysia Sharīʿah scholars. 10. Securities & Exchange Commission Pakistan of Pakistan 11. Securities and Exchange Iran Organization 4

SURVEY FINDINGS 5

SURVEY FINDINGS PART 1 : GENERAL INFORMATION OF THE COUNTRY’S SHARĪʿAH SCHOLARS IN ISLAMIC FINANCE 1. Does your country have Sharīʿah 2. The number of existing Sharīʿah scholars for Islamic finance? scholars for Islamic finance in your country? 120% 100% 100% More than 30 55% 80% 60% 16 to 30 9% 40% 20% 0% 1 to 15 36% 0% Yes No 0% 10% 20% 30% 40% 50% 60% 3. In which area of Islamic finance does your Sharīʿah scholars involve? 120% 100% 100% 81% 72% 80% 60% 40% 20% 0% Capital Market Banking Takaful 6

SURVEY FINDINGS – Part 1 5. Do you register/license individual 4. Is the requirement to appoint Sharīʿah Sharīʿah scholar/ Sharīʿah advisory firms scholars in Islamic finance part of your in Islamic finance to structure/advise on regulatory framework? the ICM products? Yes; 27% No; 45% Yes; 55% No; 73% 7

SURVEY FINDINGS – Part 1 7. What is the estimated number of 6. Does your country experience shortage of Sharīʿah scholars needed by your Sharīʿah scholars in Islamic finance country in the next 5 years to cope industry? with the development/expansion of Islamic finance industry? No; 100% 18% 91% 90% Yes; 82% 80% 70% 60% 50% If "Yes", which area is affected most? 40% 30% Islamic capital market 82% 20% 9% 10% Islamic banking and Takaful 45% 0% 0% 1 to 15 16 to 30 More than 30 0% 20% 40% 60% 80% 100% 8

SURVEY FINDINGS – Part 1 If your answer is “Yes”’, please rank (1 to 3) the 8. Are there initiatives to train following initiatives/programmes that being Sharīʿah scholars specialising in pursued the most in your country? Islamic finance in your country? 1. Continuous training on No Islamic finance (on the job 18% training, attend seminar or workshop on Islamic finance , etc) Yes 2. Tertiary education in Islamic 82% finance 3. Sponsorship/financial assistance to undertake Islamic finance studies (e.g. employer to sponsor staff to acquire knowledge on Islamic finance) 9

SURVEY FINDINGS – Part 1 9. Are there existing collaborations If ‘No’, are there plans for such between the local industry, academia collaborations in the near future? and regulators with external parties outside your country in ensuring sustainable supply of qualified and skilled Sharīʿah scholars in Islamic finance? No 40% No 27% Yes Yes 60% 73% 0% 10% 20% 30% 40% 50% 60% 70% 10

SURVEY FINDINGS PART 2: THE IMPORTANCE OF DEVELOPING CAPACITY BUILDING PROGRAMME FOR SHARĪʿAH SCHOLARS IN ISLAMIC FINANCE 1. Do you think that it is necessary to 2. Where did most of your Sharīʿah develop skills of Sharīʿah scholars in scholars undergo their training programmes in Islamic finance? Islamic finance through the structured training programmes? 120% Both local and overseas 36% 100% 100% 80% Overseas training institution 9% 60% 40% Local training institution 55% 20% 0% 0% 0% 10% 20% 30% 40% 50% 60% Yes No 11

SURVEY FINDINGS – Part 2 List of Training Programmes Country 3. Does your country have regular Turkey • The Participation Banks Association of training programmes specialized in ICM for Sharīʿah scholars? Turkey Training Programmes • Imam Sadiq University in Tehran, Iran Mofid University in Qom – licensing requirements to pass ICM educational courses • Shariah Professionals Programme, Malaysia Yes Shariah Advisers Programme 27% These 3 countries rated the effectiveness of their own programmes as ‘Very Effective’ No 73% Reasons: • Lack of information on such programme • No demand • Budget constraint 12

SURVEY FINDINGS – Part 2 4. If you have attended external training 5. What are your country’s immediate plans to programmes for Sharīʿah scholars in Islamic develop Sharīʿah scholars on Islamic finance? finance, what are the main issues relating to effectiveness? Please rank (1 to 5) the Send staff Establish following issues in order of importance. for overseas training training institutions specializing 31% in Islamic 1. Topics lacked in applied issues – inability finance to apply knowledge to practice 31% 2. Content of the programme lack coverage of important topics Train the 3. Lack of interactive discussion and case trainer 38% studies Other plans: 4. Language barrier • To draw expertise from the established centres of excellence in the country • Providing more interactions with 5. Ineffective trainers practitioners 13

SURVEY FINDINGS – Part 2 6. What type of capacity building programme do you prefer for Sharīʿah scholars? 7. Do you agree that there should be collaboration among OIC member countries to organise training On the job programmes for Sharīʿah scholars in training Workshop Islamic finance? (industry 34% attachment) 22% 120% 100% 100% 80% 60% Conference / 40% Seminar 11% 20% 0% Specialised / 0% customised programme Yes No 33% 14

SURVEY FINDINGS – Part 2 8. Please identify the importance of the following ICM areas for developing skills of Sharīʿah scholars? Areas Critical Very Fairly Not Very Important Important Important Sharīʿah principles and contracts 30% 70% - - Contemporary Sharīʿah issues and 20% 80% - - challenges Sharīʿah governance 10% 50% 40% - Regulatory requirements and legal 30% 50% 20% - documentation 20% 40% 30% 10% Tax and accounting 20% 40% 40% - Islamic equity market Sukuk market 30% 60% 10% - Risk Management 20% 50% 30% - 20% 30% 40% 10% Strategy and policy 15

KEY FINDINGS AND PROPOSAL SOLUTIONS Key Findings Proposed Solutions • Shortage of Shariah scholars in ICM • Collaboration among OIC member countries to organise specialised training pogrammes • No regular training programmes for Sharīʿah scholars in Islamic finance e.g. specialized in ICM for Sharīʿah scholars o Through COMCEC Project Funding • Important to develop skills of Shariah o Multilateral or bilateral arrangement scholars in the relevant areas of ICM among training institutions, e. g. lacking in applied issues (inability to international regulators, and / or apply knowledge to practice) industry • • Leverage on the existing training programmes Lack of information on professional available in the market programme for Shariah scholars • • Engage with experts from the established Budget constraint centres • Provide more interactive discussion with practitioners 16