العدد الحالي: تشرين 1/اكتوبر 2018       اختر عدد :
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كلمة المجلس العام

Abdelilah BELATIK

Secretary General of CIBAFI

Welcome to the 37th issue of the Global Islamic Economics Magazine (GIEM).  We continue to update you with the current development of the Islamic economics and financial industry worldwide. The GIEM also serves as the venue of CIBAFI to update the members and other stakeholders of CIBAFI’s activities and initiatives.

 

In this issue, it is a pleasure to inform you about the recent launch of the first CIBAFI proceeding of the CIBAFI-IDB Roundtable Meeting, organized on 23-24 February 2015, in Manama Bahrain, themed “Internationalisation Strategies for Islamic Financial Institutions”. This Report on the Roundtable meeting has been prepared by CIBAFI Secretariat. It summarises the key points made during the Roundtable and identifies priorities and action items that will enable IFIs to fulfil their desire to deepen and widen their international operations. The Report synthesises the presentations and the discussions among participants at the Roundtable and includes additional material subsequently submitted by the speakers.

 

The Report consists of three main parts. The first part addresses how IFIs can identify suitable markets into which to expand and the key considerations that IFIs should keep in mind before venturing overseas. It also describes the different strategies that can be used to enter new markets. The second part considers how an IFI can leverage its brand to assist overseas expansion, while also cautioning on the danger that expansion may dilute an institution’s core values. This section also describes the challenges that IFIs may face in maintaining and strengthening their governance and compliance functions as their operations become more complex and widely spread. The third part describes how Islamic financing can be structured in a way that enables new players to participate, especially smaller players who may have limited financial resources and less experience of global financial markets. Specifically, this section considers how to structure Shari’ah-compliant syndications and trade finance.

 

The final section draws general conclusions and identifies some takeaway points related to best practices and policy recommendations that will facilitate the global expansion of IFIs. Some of the key points were identified during the CIBAFI Roundtable that could lead to greater internationalisation of IFIs.

 

For the first takeaway point, regulators and Islamic finance standard setters have a role in promoting a cross-border level playing field that enables IFIs to internationalise, as well as facilitating an increase in the volume of cross-border Islamic investment flows and transactions.

 

Second, IFIs need to take a rigorous approach to market selection and also to their mode of entry into new markets.  If entry is to be profitable it requires achieving significant size rather than mere flag-planting.  It is also likely to involve reforms to governance and risk management. In addition to adopting a rigorous and structured approach to market selection, IFIs need to consider how entry into each market is to be achieved.  The principal options are to create a new operation from scratch, merger or acquisition, or partnership with an existing player.  The last of these has considerable merits from the point of view of flexibility and sustainability of the new operation.

Third, IFIs need to reconsider their branding and business models in the light of the needs and values of customers, both Muslim and non-Muslim and to shift from models based purely on shareholders’ values to a broader concept of stakeholders’ values. More broadly, IFIs need to strengthen relationships and enhance engagement with different groups of stakeholders and to move from satisfying shareholders’ to satisfying stakeholders’ values and well-being.

Fourth, there is a need to enhance the volume of co-financing among IFIs and trade financing across regions, aligned with the emerging trend of increasing economic growth and trade flows of Muslim-majority countries.

 

In line with the CIBAFI’s Strategic Objectives, the Council is active in promoting global Islamic finance industry development through information sharing, research, and publication. CIBAFI focus and efforts are determined towards achieving its four key Strategic Objectives in order to strengthen its role as the global umbrella of Islamic financial institutions. Other initiatives are being planned in all four Strategic Objectives. Stay tuned.