Islamic financial institutions should adopt IIFM standards
KUALA LUMPUR: The adoption of the International Islamic Financial Market (IIFM) standards will result in a stronger and more vibrant Islamic financial services industry, said Danial Mah Abdullah, director-general of the Labuan International Business and Financial Centre (Labuan IBFC).
He said it could also lead to a more balanced and equitable growth for Muslims and the global community as a whole.
“IIFM standardised agreements provide a globally recognised cross-border liquidity management and hedging tools that will help to mitigate risks associated with cash flow management, currency fluctuations and rate of return mismatches.
“The ability to hedge market risks and manage liquidity are paramount for the continued growth and internationalisation of Islamic finance,” he said in his opening speech at the IIFM Seminar on Islamic Financial Markets yesterday.
The seminar, themed, “A Broad Spectrum of Horizon and Opportunities- Towards Achieving Sustainable and Balanced Growth in the Islamic Financial Sector”, was co-organised by the IIFM and Labuan IBFC.
Danial also noted that global Islamic financial assets had increased to US$2.4 trillion last year from US$800 billion in 2007, while total sukuk outstanding increased to US$376.6 billion from US$55.3 billion within the same period.
Meanwhile, global Islamic assets under management also grew to US$117 billion in 2017 from US$47 billion previously.
“Islamic finance has also expanded its scope, entering new growth areas such as supporting green, ethical and environmental-friendly development projects, financing international halal trading business and funding international infrastructure projects,” he said.
Danial added that Islamic finance had also entered into financial technology sectors such as equity crowdfunding and peerto-peer financing platforms.
Moving forward, he said the IIFM would focus on standardisation in areas such as Islamic syndication documentation, gold-related wholesale products and agreements, Islamic foreign exchange, commodity hedging and investment products.
“Standardisation will elevate efficiency and transparency, as well as promote trust and confidence to drive the Islamic finance industry to a higher level of maturity,” he added.