What role does CIBAFI play in the overall development and promotion of the Islamic financial services industry in the global arena?
HAFIZ: CIBAFI (General Council for Islamic Banks and Financial Institutions) is an international organization registered in Bahrain. We are a union of Islamic banks from around the world. At the moment, we have more than 100 members in CIBAFI and we are very proud of all of them. Our mission is to promote Islamic banking and finance around the world. We are focusing on taking care of the interests of our members and ensuring that they are receiving the right advisory. We want to help them expand their business and develop strong relations within the Islamic banking community. We want to take care of the stakeholders around the world. We believe we are doing fine and we hope to continue being successful in the future.
How would you describe the current state of demand for Islamic financial products and services? How do you see this progressing over the next 2-5 years?
HAFIZ: The entire world is becoming increasingly more interested in Islamic finance. The world is paying close attention to Islamic countries in order to have a better understanding of the industry. They want to see the positive impacts that Islamic financing has on a country’s economy. OIC (Organization of the Islamic Conference) member countries are required to look at these elements. The world is looking at these member countries as a representation of the potential impacts that Islamic finance can have. They need to see that Islamic banking is contributing to their economies. The world needs to see that Sharia compliant institutions are doing well and are successful in investing liquidity. Islamic financial institutions need to show that they are successful in financing a countries’ development. As a result, a lot of work needs to be done by the regulators to show that they really have something to be proud of. Until recently, we have had a small share of the financial business in Arabic countries. We are looking to gain a larger share because it currently stands at roughly 10%, which is very minimal. Our current share does not fulfill our hopes. As a result, we are looking for the full support of Islamic governments for the industry. This is why CIBAFI is trying to create strong relationships with supervisory authorities around the Muslim world that can take care of this infant industry.
What are the reasons that Oman has entered the Islamic financial services industry only recently?
HAFIZ: Oman is a Muslim country and it is very natural that they are now implementing Islamic banking. They are creating a platform for all businessmen and foreign investors to come to Oman and establish Islamic banking entities. We at CIBAFI are very happy that Omani authorities have issued their regulations to open the door. This is for Islamic businessmen around the world to come and invest in Islamic banking. It is a new product with its own features that will help benefit society. Please come into Oman. The market is open to you. The market is hungry for Islamic financial services and products. Omani businessmen are estimating that there is roughly OMR 3bn ($7.8bn) under the table right now. It is not in the financial system of Oman because of the issue of Islamic versus conventional ideals of banking. As a result, please go ahead and establish Islamic banks in Oman.
How has regulatory intervention helped facilitate the growth and development of the Islamic financial services industry?
HAFIZ: The most important thing is that there are regulations. It must be understood that no regulation is perfect. The world is moving and modifications always have to be done. There will always be a need to update things. So now, there is legislation and there are regulations. Take it and you will find that it is a good start. I am not saying it is perfect. There are always some comments. There are always reservations but we must start somewhere. Do not let whatever shortcomings you see stemming from regulations prevent you from partaking in the industry. Move forward and you will find some way or another to achieve your goals.
What are the necessary prerequisites for Islamic finance FDI flow to Oman?
HAFIZ: FDI is very important to each country because the world is now becoming one small village. We are interacting with every country. Inflow of foreign direct investment is very important to a country as well as outflow. Countries are looking for Omanis to come and invest. We are also looking for other GCC countries to come and enter Oman. This structure of the global economy has its own features and is not the same as it used to be before. This is why the World Trade Organization (WTO) is trying to open up economies. There are a lot of agreements occurring to help open up countries. All countries are trying to be more open to others with their own features and interests.
Until recently, we have had a small share of the financial business in Arabic countries. We are looking to gain a larger share because it currently stands at roughly 10%, which is very minimal.
How have rising political tensions in the Middle East, along with the debt crisis in the West, impacted the global Islamic financial services industry?
HAFIZ: The problem is that the Western economies have most of the wealth in the world. Any crisis that occurs there affects everybody around the world. This means that there should be further collaboration, coordination, and understanding of each other. It should be a win-win situation and everybody should be winning. No one should be suffering. This should be the goal for everybody around the world. We just need to figure out a solution and everybody will be happy.