D-8 Organization, with the full support from and coordination with Bank Negara Malaysia has recently organised the Session of the Developing Eight (D-8) Working Group on the Development of the Islamic Financial Services Industry in Kuala Lumpur, Malaysia on October 28, 2010. The meeting was held to generate discussions on the importance of Islamic finance and the strategy for developing interlinkages among the D-8 member countries. This meeting was also a follow up to the decision reached in the Meeting of Governors of the D-8 Central Banks which was held in Abuja, Nigeria on 6 July 2010 which highlighted the importance of Islamic finance.

The meeting, which was attended by full participation from eight member countries, has successfully shared the experiences from participants on capacity building in developing Islamic finance in their respective countries, and resulted in the call on the D-8 member countries to enhance inter-linkages of the Islamic finance industries among member countries. This inter-linkages is believed to facilitate private sector’s initiatives and cooperation to create new business opportunities within the D-8 member countries.

D-8 Secretariat shared its view on the meeting by highlighting the tremendous growth of international Islamic finance, in particular the robust development of Islamic banking and capital market. It also cited recent trends in the Islamic finance industry across the globe such as sukuk issuances, and stressed that the established enabling environment in particular the facilitative regulatory and tax environment has contributed towards this success.

Based on the country presentations, the Chairman of meeting, Deputy Governor of National Bank of Malaysia, Dato’ Muhammad bin Ibrahim, highlighted the vast opportunities and potential areas of collaboration which were available within the D-8 membership itself, among others were:

(i)    Sukuk market

The development of sukuk market can be the mechanism for further advancement of the global Islamic finance industry where sukuk can act as the conduit to enhance linkages between D-8 member countries.

(ii)    International Islamic Liquidity Management Corporation (IILM)

The newly established IILM serves as a platform for D-8 members to leverage as a means to improve management of liquidity and money market in their respective Islamic money markets.

(iii)    Established institutional infrastructure and technical expertise

The D-8 members can also leverage on the established platforms in the respective countries, for instance the microfinance developments in Bangladesh and Indonesia, the Arab Academy for Banking and Financial Sciences in Egypt that offers training in financial services, the Global Takaful Group in Malaysia that can be used to enhance the retakaful capacities of D-8 member countries.  In addition, member countries were offered assistance to develop legal and regulatory framework relating to Islamic finance and attachment opportunities by the State Bank of Pakistan.

(iv)    Legal and Shariah framework

A few members of the D-8 briefly shared the Islamic finance initiatives including planned amendments of banking legislations and establishment of Shariah audit and Shariah governance frameworks.  The Chairman highlighted that these efforts could be accelerated by seeking assistance from D-8 members which have undergone the similar processes in the past.

The meeting also shown interest in studying for further information on the Islamic credit cards introduced in Iran, as well as on the initiatives as shared by the member countries e.g. issuance of the Revenue Indexed Bonds by the Turkish Treasury. The meeting also welcomed member countries to leverage on the established human capital infrastructure and the experience gained from the creation of a robust Islamic capital market in Malaysia.

Reiterating that his country is in the midst of building the institutional capacity for the Islamic finance industry, the delegation from Nigeria welcomed a greater cooperation from the D-8 members to further enhance Islamic finance in Nigeria particularly in the area of training and development of human capital.

The Pakistan’s representative suggested for efforts to be made in the area of Shariah harmonisation in Islamic finance transactions and for further cooperation to be fostered among the industry players along with the existing collaborative framework established between the regulatory bodies.  In line with this suggestion, the representative from Turkey further suggested for D-8 to create a platform for its industry practitioners to share their industry’s perspectives and forge greater alliances at the institutional level.  Turkey also applauded the developmental efforts on Islamic microfinance in Indonesia and suggested for micro finance to be one of the strategic thrusts for D-8.

Photos of this meeting can be viewed by clicking in this Document and Resource menu, Multimedia then Gallery.