Moderator Abdulkader Thomas started the session by asking Christopher Aylward for his view on connectivity between the markets and the issues on convergence, particularly between the GCC and Asia.

Aylward said there is a continuing message of cooperation and discussion on certain issues toward the ultimate goal of a uniform approach in Islamic finance.

The common denominator in some of the key hubs for example between the Dubai International Financial Centre and the Malaysia International Islamic Financial Centre is the flexibility of regulatory reform and putting together the regulatory framework for the growth for Islamic finance in the respective countries.

On another level, some firms in the GCC are using Asia as a center for expanding customer and investor opportunities, for instance as KFH has done. Conversely, CIMB has a presence in the Gulf tapping the investor base there.

Abdulkader then asked Ahmad Tayara on the issues that Gulf investors might face in their decision-making processes. Ahmad said first and foremost, not only must there be availability of assets but also asset quality. Today, there is a lot of money chasing too few good things. For the GCC it is important to ensure that there is asset quality.

The other aspect is making sure that the Islamic banking industry has certain growth if it wishes for the inflow of GCC money.

Another aspect is taxation, for in the GCC, taxation does not exist beyond zakat requirement.

Finally, there is an issue of standardization which has been going on for quite a while, he added.

Md Noor A Rahman then shared his experience on cross-border transactions, saying that Tabung Haji had been involved in transactions of this sort and has some proposals with Middle Eastern parties. Tabung Haji has also invested in properties in Mecca and Madinah with Middle East parties.

On whether there are still regulatory issues that could be an impediment to the flow of capital and opportunities in both directions, Jal Othman said there are none but sees the simulation in this part of the world and sees Malaysia as poised to take on a few roles.

One of the greatest strengths Malaysia has is moderation. Secondly, in terms of export capability, its strength lies in its regulatory framework.

According to Jal, common vision and values act as a catalyst for greater simulation and perception correction which is the fourth factor is important and Malaysia needs that step now. He also said in ethical financing, the Islamic elements should be downplayed.

Abdulkader then asked Muzafar Hisham his point of view on the convergence issues that concern successes. Muzafar said the success of the Islamic capital market in the years to come is the link between Southeast Asia and the GCC. Asia must prepare to be a conducive place to kick off the Islamic capital market for not only Sukuk but the equity market and structured investment products as well.

With regard to tax, there must be a level playing field and in terms of structuring, Hong Kong and Singapore are seen as taking these steps.

Secondly, there is a need to maintain a conducive environment and the capital market has to maintain its best practices and, at the same time, not breach the Shariah principles.

Thirdly, regulators, whether in Hong Kong or Singapore, must be clear about Shariah and have a Shariah policy.

Another issue is to respect the jurisdiction where the instruments are going to be offered and adhere to the requirements of that jurisdiction. If they are to be offered in the GCC, then they must meet the requirements of GCC.

Before wrapping up the session, Abdulkader asked Aylward whether sovereign wealth funds are playing a neutral, progressive or no role at all in expanding Islamic finance, to which Aylward said there is huge opportunity for the funds to have a role in expanding Islamic finance but there is no requirement for them to take such roles.

“There is an opportunity for them to play but it is whether sovereign fund see that as part of their role in developing the growth of Islamic finance,” Aylward added.