Moderator Abdulkader Thomas asked the panelists on the progress of the Malaysia International Islamic Financial Centre (MIFC), its positioning, successes and what it can improve to attract and develop business. According to Mohammad Faiz Azmi, MIFC’s incentives are geared towards just that and it does not just encompass banking and Sukuk but wealth management, Takaful and a wide spectrum of Islamic finance.

There are a number of tax incentives for 10 years ending 2016, which have attracted investors to Malaysia. MIFC also has a human resource development and talent management pool that is being enhanced.

Daud Vicary Abdullah was asked to share his perspective from a GCC-owned organization in Malaysia and using it as a regional or international stepping stone. According to Daud, the shareholders of Asian Finance Bank (AFB) saw in Malaysia a good regulatory environment and a progressive Islamic system that has been in place for three decades.

He said the decision to set up in Malaysia was also due to the availability of talent who could start up the bank’s operations and infrastructure.

Abdulkader then asked Dr Veerinderjeet Singh for an update on the tax regulatory scheme that governs MIFC and how it can enthuse people to take up the opportunity. Veerinderjeet said overall, Malaysia has a number of tax incentives such as income tax exemption for 10 years for international Islamic banks, international Takaful companies and international currency business units (ICBUs) within domestic Islamic banks, and there is also holding tax exemption for non-residents receiving interest from Islamic banks in Malaysia. Last year saw the introduction of a tax exemption on the fees received by non-resident experts who provide Islamic financial services in Malaysia.

In response to Abdulkader’s question on the outflow of Malaysian skills, Nik Norishky Thani said Malaysia’s talent is highly regarded when it comes to Islamic finance.

Hence, when new financial centers open up with a need to focus on Islamic finance, they will obviously look at Malaysian skills for their organizations. He said the GCC has an estimated US$600 billion worth of infrastructure projects and the deals for the projects will use the technology that Malaysian banks are familiar with. MIFC is a brilliant platform for Malaysian banks to use as a springboard to venture into the capital market.

Abdulkader then asked Rushdi Siddiqui whether the Islamic finance sector has enough trained Islamic scholars or only “12 superstars”, and if so, what can be done to change the situation.

Rushdi said in addressing the issue, there should be an increasing number of Shariah consulting firms from the current four or five.

Rushdi said MIFC needs to set up a global Shariah consulting firm, modeled after a law firm with partners, junior practitioners and associates, located in various jurisdictions.

To Abdulkader’s question on the barriers for Malaysian institutions to use MIFC as a platform, Faiz said Malaysian banks are comfortable in the Malaysian markets and it requires a different mindset to operate in a different jurisdiction.

Daud said the financial institutions should take more of a lead and think outside the box and take it on to a regional global basis which is a challenge in the industry today.

Veerinderjeet said it is about partnering with foreign institutions and using Malaysia as a hub and getting necessary incentives in the process.

Nik said good examples of successful domestic banks venturing abroad are AFB, KFH and Al Rajhi. Al Rajhi had never ventured beyond Saudi shores but is successful in Malaysia.

The first lesson to be learnt from these banks is that when moving abroad, an institution must have a good presence in the region it intends to operate in. Another issue is distribution, which is a long process and banks need to build relationships in order to have a good distribution network.

Nik Norishky said Islamic finance is a fairly new industry and it is a useful opportunity for all the different financial centers to actually work together, not for the benefit of their own financial centers but for the Islamic finance industry.