Oman is well positioned to attract Islamic funds for its economic development, if the country formulates the right regulatory environment and train human resources to work in Sharia-compliant institutions, says an expert.
“The major issue is regulatory environment. We also need to train people to work in Islamic banking institutions,” Dr Mabid Ali Al Jarhi, financial expert and head (Training) of Emirates Islamic Bank, told Times of Oman.
Addressing an Islamic banking conference here yesterday, Dr Al Jarhi, added that the Sultanate’s regulatory authorities should formulate an ideal model for the country. International Turnkey Solutions (ITS), a global leader in Islamic banking technology solutions, has organised the conference, which was attended by 75 banking executives and experts.
He said the prevailing two models of Islamic banking – Malaysian model and Gulf model – are not suitable for Oman. ”The Sultanate should avoid both and has to formulate its own model.”
An attractive model should be formulated keeping in mind a high degree of operational efficiency, avoiding products that lack reputation and allow innovative process.
The Central Bank of Oman, he said, should look into amending its existing laws, or prepare a new draft banking law to put Islamic banks on an equal footing with conventional banks. “(If these factors are in place), the Islamic finance market in Oman could operate at levels that could compete with regional institutions.
Funds, which have been flowing outwards, could be repatriated and foreign funds could be attracted to Oman,” added Dr Al Jarhi.
Dr Al Jarhi said the investors who have parked their funds outside Oman will repatriate their money, if the local institutions can offer best quality Islamic banking products.
“The country will attract funds from neighbouring Gulf countries. These funds can be used to finance public projects.”
The Islamic finance industry is currently valued at $1 trillion worldwide, of which $210 billion is invested in the Middle East.
He also said the institutions should find out the customer needs through proper market research. New products should be structured under the supervision of Sharia board.
“Islamic banks need to mature operationally and make the technology investments required to be competitive on a global scale. For Oman, the future is very bright if banks here take the necessary steps required to build a solid foundation for Islamic banking,” said Dr Haroun Dharsey, senior vice-president of operational projects at Dubai Islamic Bank.
source : times of oman