SHOCKING (BUT TRUE) STATISTICS TO THINK ABOUT.....

I was reading an article from The Forbes.com titled The Enforcers, and was shocked and bewildered to learn of the following statistics :

· Currently, there are only 20 men that act as the gatekeepers of the Islamic finance realm

· There are no more than 260 scholars worldwide that have the necessary knowledge in Islamic finance

Islam has overtaken Roman Catholicism to become the world's largest single religious denomination, the figures for 2006 showed that Catholics accounted for 17.4 % of the world population while Muslims accounted for 19.2 % (figures obtained from United Nations). The Vatican puts the number of Catholics in the world at 1.13 billion people, while the figure for Muslims is estimated at around 1.3 billion.

Look at the numbers – what it means is that there is 1 Islamic finance scholar for every 5 million population worldwide. What happened? What went wrong?

Islamic banking and finance is a very lucrative business and yet only 260 scholars are well versed in the field. Malaysia has done a very good job by coming up with INCEIF (International Centre for Education of Islamic Finance) – another brainchild of Bank Negara Malaysia They are producing CIFP graduates and their Master and Doctorate degrees in Islamic Finance are still in the infancy stage but they are making progress. What about the other Islamic nations?

Islam is the religion which was given to Adam, the first man and the first prophet of Allah, and it was the religion of all the prophets sent by Allah to mankind. The name of God's religion lslam was not decided upon by later generations of man. It was chosen by Allah Himself and clearly mentioned in His final revelation to man. In the final book of divine revelation, the Qur'aan, Allah states the following:

"This day have I perfected your religion for you, completed My favour upon you, and have chosen for you Islam as your religion". (Surah Al-Maa'idah 5:3)

"If anyone desires a religion other than Islam (submission to Allah (God) never will It be accepted of Him" (Surah Aal'imraan 3:85)

"Abraham was not a Jew nor Christian; but an upright Muslim." (Surah Aal'imraan 3:67)

Think about it – think really, really hard. If the Muslims don’t help ourselves, who else will do it for us?

ISLAMIC BANKS COULD ALSO SUFFER AS CRISIS EVOLVES

Political and business leaders at the World Islamic Economic Forum in Jakarta this week have been praising the prudence of Islamic financial institutions. They say Islamic banks have not been hit by the global financial crisis as hard as their Western counterparts because they refrained from investing in toxic assets that were deemed "un-Islamic."

Indonesian President Susilo Bambang Yudhoyono says the financial crisis has proved the strength of Islamic methods of banking and finance. He says Western bankers have a lot to learn from Islamic finance, and he is calling on Islamic banks to take more of a leadership role in the global economy.

The focus on the Quran's prohibitions arguably make it difficult for Islamic financial institutions to work in the same way as a conventional Western bank. For example, Islamic law prohibits investment in businesses that sell alcohol or pork, or that are involved in gambling. That means an Islamic banker must ensure clients that their deposits are not being reinvested in a firm that does business deemed as "un-Islamic."

Another basic rule of Islamic finance is a prohibition against what the Quran calls "riba" -- a word interpreted as the payment and collection of interest on loans or savings deposits. Under Islamic law, transactions must be backed by real assets -- tangible, physical assets such as gold, land, or equipment.

Abdul Gafoor, a Netherlands-based author on Islamic finance, opines that these Shariah-compliant rules prohibited Islamic bankers from dealing in second-hand interest-bearing mortgages -- the financial assets at the root of the U.S. subprime property market crisis which pushed the world into economic crisis. But it didn't prohibit them from investing directly in real estate, which has been losing value in many countries since last year. "[Islamic banks] go mostly for real estate and that kind of thing. And when real estate prices go down, [their portfolios] also go down," Gafoor says. "It depends on whether they invested directly in real estate or through securities. Here, you cannot make a general claim [about the strength of Islamic banking]. It depends on each individual bank -- how they behaved."

In fact, there isn't a fixed set of rules that governs Islamic banking. Like Shari'a law, it's subject to interpretation. Some conservative Islamic scholars have concluded that investing in stock markets is a form of gambling -- and is therefore prohibited by the Quran. But others interpret the Quran to mean that they shouldn't get involved in day trading -- the practice of buying shares one day with the intention of selling that equity soon after for a profit. Those Islamic bankers have invested in equity.

"The thing about Islamic banking, at the end of the day, in some respects, it is going back to banking the way it used to be done," Neil Miller, a prominent Islamic finance expert and partner at the Norton Rose international law firm in London, says. "So it is very much based on relationships, on analyzing risks, and understanding the risk and the relationships in the specific projects or company that you are looking to finance and getting comfortable with that. People need to go back to fundamentals."

But Miller also warns that being an Islamic bank is not enough to guarantee immunity in the long run from the financial crisis. He opines that some Islamic banks still could be hurt as the impact of the crisis spreads across the globe -- sending land and equity prices tumbling. "Islamic banks have certainly avoided the worst excesses of the toxic-asset problem because they were certain asset classes that they could never have invested in. So in that regard, they have been insulated," Miller says. "As the crisis has developed and turned into a credit crunch, I think you have to start looking at Islamic banks in different countries and different parts of the world."

Miller says that in some places, such Islamic institutions are better insulated against adverse affects from the current troubles. "It really depends on exactly what their current asset component is," Miller says. "Many of the Islamic banks hold high levels of real estate and high levels of private equity. So although they have not been badly hit with bad debt through lending, which they can't do, they have been hit by asset valuations -- as some of their portfolios are perhaps not as robust as they had been in previous years."

Duncan MacKenzie, director of economics at International Financial Services in London, says there are other aspects of Islamic finance that have helped Islamic banks fare better as the economic crisis evolved into a credit crunch -- the drying up of credit that has made it more difficult for anyone, including banks, to obtain short term loans.

Experts point out that Islamic banks tend to lean more heavily on deposits, since they can't fund themselves on the interbank market that sustains conventional banks.

Senior analyst Firas Abi Ali, from the Islamic Financial Information Service, agrees that Islamic banks generally are better placed to handle the credit crunch. He also says the turbulence and uncertainty in the conventional banking system is now prompting some non-Muslims to consider the option of Islamic banking. Former Soviet republics in Central Asia also have been taking steps to create a legal framework for Islamic financial institutions.

In February, Kazakhstan's Nursultan Nazarbaev signed amendments into law that are expected to help establish Islamic banking in the country. Kyrgyzstan's parliament last month also approved amendments on the introduction of Islamic financial principles into the country's banking system.

But critics say there are other issues that should make potential investors do their research before investing money in an Islamic bank.

Some say that Islamic finance has become so intertwined with the global financial system that problems in the future are unavoidable -- especially as prices tumble for assets like real estate. Gafoor concludes that there is no real data available to check the claim that Islamic banks are largely protected from the global financial crisis.

The balance sheets being made available to the public by some major Islamic banks are unaudited, which raises questions about the real extent of their exposure to the crisis -- even if their investments are deemed Shariah-compliant.