Professor Humayon Dar, Editor-in-Chief of GIFR 2011, comments, "In the aftermath of the global financial crisis there is a pressing need for an alternative financial paradigm, one that is imbued with a sense of social responsibility whilst maintaining a profit maximisation objective. Islamic finance presents such an alternative. Since its inception 40 years ago, Islamic finance has grown and is still growing at a precipitous rate. More Muslim and non-Muslim countries are adopting Islamic finance services highlighting a bright future for this once niche industry"
To increase coverage, greater information and analysis is required. GIFR 2011 fulfils this need. It combines theory and practice relating to the developments over 2010. It is written by over 50 leading industry practitioners, calling upon their expert knowledge thereby granting accurate and authoritative analysis of the market. The report covers a wide array of topics looking at industry developments, regulation of Islamic finance services and country approaches to Islamic finance.
"I am using this report as a thought leadership initiative to connect the world [to Islamic finance]," commented Datuk Noripah Kamso, CEO of CIMB Principal Islamic Asset Management, Malaysia. "There is no such product available in the market," asserts Professor Dar. "GIFR 2011, like its predecessor GIFR 2010, is a must have for anyone interested in Islamic banking and finance."
Key findings from the report show that the Islamic finance industry is valued at $1.14 trillion and is growing at a rate of 10%. The industry is gradually building the depth, quality and quantity of its product portfolio and entering into new, previously unfounded fields in the financial markets. There are new fangled Shari'a compliant derivatives, innovations in asset and wealth management, improvements in efficiency of banking and the creation of products which satisfy regulatory requirements. However, as a nascent industry, there are teething problems. Generally, bankers and regulatory systems are failing to consider the subtle nuances of Islamic finance law. Human resources with the necessary expertise are limited. There is still a perception problem with many potential consumers adopting a cautious approach. But this is to be expected and will take a few years to resolve.
GIFR 2011 contains an overview of the Islamic finance industry in 55 countries, providing a snapshot of the state of the industry in 2010 and focuses upon political, legislative and financial developments within the Islamic finance space. Certain countries such as the UK, once a keen advocate of Islamic finance, have over the years shown less commitment. On the other hand, other countries like Australia and France are seeking to bring in Islamic finance products and services into the country by undertaking a series of tax and legislative changes.
Complementing the review is the Islamic Finance Country Index (IFCI). The index is a first of its kind in the industry, a composite statistic which assesses objectively the state of the industry though the utilisation of advanced statistical techniques on a number of variables. The index gauges the depth and incidence of Islamic finance across the globe and acts as a means of comparison. Results from the study shows that Iran ranks first, while Malaysia ranks second. The index is a major breakthrough in appraising the industry.
Notwithstanding the importance of the country review and the IFCI, the main focus of this year's report is regulation. Regulation of the Islamic finance is pivotal in determining its long term success. Malaysia especially has been a trailblazer in facilitating regulatory change, driving the industry forward in not only within the country but also the wider Islamic finance industry. It has been a paragon as to what can be achieved and serves as a template to the wider Islamic finance industry. Regulation is multifaceted and GIFR 2011 attempts to cover all the major issues from risk management, taxation to creating a mature dispute resolution system.
Islamic Scholar and Associate Editor, Mufti Talha Ahmed Azami states, "The annual GIFR is intended to be a mouthpiece to the most important issues affecting the Islamic finance industry. Regulation is a major concern and therefore GIFR 2011 has brought in the best minds in the industry to give a holistic appraisal of regulatory approaches, which is not only informative but also acts as means to go forward."
The GIFR 2011 builds on the success of its predecessor, the GIFR 2010 and adds to its depth. With more contributors from across the globe, new sections and increased content, GIFR 2011 offers a comprehensive review of the industry. These annual reports intend to instruct, clarify, appraise and encourage introspection and debate amongst practitioners and those with a deep concern about the direction of the conventional financial industry. Professor Dar concludes: "BMB Islamic is proud to be publishers of another milestone in the Islamic finance industry".
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