ISLAMIC FINANCE MART NEEDS MORE HYBRID PRODUCTS

(Extracted from Business Times, February 20, 2009)

The Islamic finance market is in need of more hybrid products to meet the increasingly sophisticated needs of corporate clients, said Zain Ibrahim & Co (ZICO) chairman Datuk Dr Nik Norzrul Thani.

Local players must grab the opportunity to become more product innovative, taking advantage of the strong Islamic finance framework already provided by the authorities.

"Japan and Hong Kong are now keen (to venture) into this market and if we could become more innovative, we could easily export our expertise," Nik Norzrul told Business Times in an interview.

Nik Norzrul, a former dean at the International Islamic University Malaysia, said the presence of foreign Islamic banks in Malaysia has been positive.

"The competition has brought about more product innovation among the local players, although there is still a lot of room for improvement," he said.

Nik Norzrul advises clients on a wide range of legal matters incorporating Islamic finance, banking, offshore finance, debt restructuring, international, corporate and commercial law.

A director of Al Rajhi Banking and Investment Corporation (Malaysia) Bhd, he has also written several articles on corporate and financial issues, particularly on Islamic banking.

ZICO is the country's largest legal firm and is active in Islamic finance locally and regionally. It has presence in Indonesia, Singapore and Thailand.

It is the first law firm in Malaysia to establish a shariah advisory firm called ZI Shariah and will soon open an office in Dubai.

ZI Shariah, which is licensed by the Securities Commission to advise on sukuk, has advised clients from the Middle East who came to Malaysia on syariah framework.

The advisory services include not only for the Islamic banking legal matters, but also on personal Islamic financing and syariah-compliant wealth management.

"We have done this quite successfully with the Middle East clients and we are now contemplating to open an office in the region, maybe in Dubai," Nik Norzrul said.

Realising the growing importance of Islamic finance globally, especially among those from the Middle East who are flushed with cash, ZI Shariah has hired Arab-speaking lawyers as well as Arabic classes are being provided for its lawyers and staff.

Nik Norzrul said apart from language, legal advisers must be well equipped in understanding the syariah field, especially in the area of Islamic financing.

There is still lack of experts in this area, he said, when compared with the huge demand for Islamic financial products.

"In Malaysia, for example, why is that Muslims are still generally hesitant to engage an expert in Islamic financial management? Why is there still this assumption that Muslims cannot have wills?" he asked.

Nik Norzrul said this is an area that posed great potential and shariah lawyers should be well equipped with Islamic financial management skill.

"Muslim lawyers can play the role of family counsellors and advise Muslims to plan their finances properly before their death," he added.

My comment :

This is a good example that Malaysians can go far with their knowledge in Islamic finance, even establish their own firm in the GCC and not restrict their presence in the South East Asia region only. After all, there are nearly I billion Muslims worldwide - one must also remember that Islamic finance is not only restricted to Muslims but can attract a lot of non-Muslims as well.