HARMONISATION TO ENHANCE HARMONISATION TO ENHANCE As the Islamic finance industry evolves into a strategic financial segment to many economies, the harmonisation of global Islamic finance standards will give impetus to key areas of global growth. Streamlining can enable Islamic finance Institutions to compete more effectively with their conventional counterparts by encouraging more cross-border transactions, improve the competitiveness of Islamic finance vis-à-vis the conventional financial sector, facilitate product innovation in cross-border products and set the stage for a more cohesive and sustainable Islamic financial industry in the future as a mainstream player in the global financial landscape. 11 December 2014 1
Harmonisation of global Islamic finance standards to drive the industry to greater heights From its early beginnings as a niche area serving a number of small and dispersed markets, Islamic finance has expanded rapidly over the past decade, and is now emerging as a strategic financial segment to many economies, as well as to the global economic and financial landscape as a whole. As the industry evolves into a mainstream player, several key themes have emerged. First, key domiciles have witnessed greater drive of domestic Islamic finance institutions venturing abroad, necessitated by the need to find opportunities in new markets. Second, intensifying competition with the conventional finance sector will incentivise further debate on compliance with global financial, accounting and prudential standards; amid continued concerns on differing Shariah practices across Islamic finance jurisdictions. As such, pursuing efforts towards harmonisation of standards and adopting global best practices is a vital process in advancing the industry to new heights. Most importantly, the pursuit of alignment and divergence of these standards must not compromise Shariah principles and the prevailing goal of promoting risksharing practices and supporting real economic activity. Adoption of Global Best Practices: Key to Support Advancement of the Industry In the early days, Islamic finance focused on a limited range of plain vanilla banking products and served a few small markets via dedicated Islamic finance institutions (IFIs). These IFIs were mainly home-grown and were supported by localised demand for Islamic finance, and mostly regulated under laws which had been designed for the conventional finance industry. Meanwhile, regulations governing the IFIs were conducted on needed basis, and geared towards domestic institutions only; most institutions dealing with cross-border or global Islamic finance standards only started to gain traction in the late 1990s onwards. Today, contemporary Shariah-compliant products cover the full spectrum of retail and corporate banking, capital markets, asset management and insurance (takaful). Globally, Islamic finance now serves more than 70 countries the industry is expanding not only in nations with majority Muslim populations, but also other countries where Muslims are a minority, such as the United Kingdom, Japan, South Africa and Kenya. Of importance, the growth in Islamic finance has attracted the attention of the conventional banking industry as conventional players aspire to tap into growing market demand, alternative investment prospects and wider sources of funding. The industry s assets have grown robustly to reach USD1.9 trillion 1 as at the end of the first half of 2014. The global Islamic financial assets are well on course to surpass the milestone USD2.0 trillion mark in 2014 2, fueled by geographical expansion and increasing relevance of its products to serve across many economic sectors with different financing needs. 1 KFH Research Ltd 2 KFH Research Ltd 1
1970s 1980s 1990s 2000s Institutions Commercial Islamic banks Commercial Islamic banks Takaful Islamic investment companies Commercial Islamic banks Takaful Islamic investment companies Brokers/Dealers Commercial Islamic banks Takaful Islamic investment companies Islamic investment banks Asset management companies E-commerce Brokers/Dealers Offerings Commercial Islamic banking products Commercial Islamic banking products Takaful products Commercial Islamic banking products Takaful products Mutual Funds/Unit trusts Islamic bonds Shariah compliant stocks Islamic stock broking Commercial Islamic banking products Takaful products Islamic wealth management Sukuk Shariah compliant stocks Islamic stockbroking Islamic hedging Regions Gulf/Middle East Gulf/Middle East Asia Pacific Gulf/Middle East Asia Pacific Gulf/Middle East Asia Pacific Europe/Americas Global Offshore Markets Source: BNM, KFH Research Limited The sector has sustained double-digit growth rates annually, achieving a compound annual growth rate (CAGR) of 16.94% during 2009 2013. Apart from the well-known prohibitions against riba (interest), gharar (contractual uncertainty) and maisir (gambling), as well as investments in haram activity, Islamic financial products are characterised by a unique set of principles and contracts. These represent opportunities for practitioners, in terms of innovating products to cater to the demand for Shariah-compliant financial services; while at the same time creating a new set of challenges for regulators and supervisors with regard to prudential, accounting and documentation standards. Importantly, these standards need to be streamlined to support the sustainability of Islamic finance and enhance its role as a key enabler for economic activity. Streamlined Standards to Enhance Growth and Sustainability of Islamic Finance at Various Levels Source: KFH Research Limited Global financial industry Enchanced financial stability Islamic finance industry Improved competitiveness Global positioning Islamic financial instituitions 2
There are various advantages to improving standardisation and striving efforts toward greater harmonisation of practices. As a fastgrowing component of the global finance industry, the health of the Islamic financial sector must be accurately assessed by regulators. It is important to ensure the safety and soundness of IFIs and the Islamic finance system as a whole, to support global financial stability and to promote confidence in Islamic finance practices. In this regard, prudential and accounting standards need to be comparable across countries, as well as between Islamic and conventional institutions. For example, deposit-taking activity by Islamic banks may need a different set of rules for assessment, in light of participatory contracts which are less common in the conventional system (e.g. deposit managed on Mudharabah basis). Across countries, there are marked differences in the presentation of balance sheets amongst IFIs, including Islamic banks and takaful operators. Much of the international regulatory reforms have focused on addressing the issues that have contributed to, or that have amplified the global financial crisis. This includes the structural reforms aimed at strengthening the fundamental link between financial systems and the real economy, in particular, to protect insured deposits from excessive risk-taking, over-leverage and unfettered innovation. Leading up to the crisis, banking institutions took on risks that were not sufficiently captured by the prudential regulatory frameworks by the oversight systems. The resulting consequences were compounded by the over-reliance on self-regulation and market discipline to correct distortions which proved to be greatly misplaced. Dr. Zeti Akhtar Aziz Governor, Bank Negara Malaysia at the 7th Islamic Financial Services 7 April 2013 Doha, Qatar At the industry level, the standardisation of documents would support cost-effectiveness of Islamic finance transactions, which in turn would improve the competitiveness of the industry vis-à-vis the conventional financial sector. Amongst others, greater costeffectiveness is important to facilitate product innovation for cross-border transactions. The standardisation of documents for interbank transactions and deposit placement arrangements between IFIs, for example, would encourage more cross-border transactions and enable IFIs to compete more effectively with their conventional counterparts. Meanwhile, at the IFIs level, the adoption of global best practices and cost-effective operations would indirectly help to improve the ratings of these entities, supported by clearer reporting and compliance of international capitalisation and accounting standards. IFIs with healthy ratings would thus enable a more robust expansion plans. Furthermore, larger IFIs will be better able to serve businesses which seek end-to-end Shariah compliance; at present, smaller Islamic banks or takaful operators may not be able to support large transactions due to their lack of scale. Furthermore, the increasing internationalisation of Islamic finance witnessed in recent years weighs up the needs to streamline regulatory and supervisory practices, financial reporting expectations and 3
to develop mutual understanding in dealing with differences in Shariah opinions. Regulatory authorities will also need to monitor potential adverse impact of other jurisdictions development on their domestic financial systems and create a robust crisis management system. As Islamic finance expands beyond borders, this challenge becomes a global one, and necessitates the importance of streamlined standards for the industry. A major opportunity for cross-border Islamic finance transactions is the trading of goods and services; intra-oic (Organisation of Islamic Cooperation) trade alone was valued at USD742bln 3 in 2012. Meanwhile, the halal market was valued at USD3.2tln in 2012 (2018 Forecast: USD6.4tln) 4, suggesting substantial opportunities for Islamic finance to cater to this industry and its cross-border trading activity. Broad Areas to Facilitate Cross - Border Activity in Islamic Finance Clarity on cross border regulatory issues and homehost supervisory framework Standardisation of documentations to support active interactions between IFIs Streamlined financial reporting and compliance process Managing differing Shariah views and practices Global efforts to develop industry standards and harmonise practices The sustainability of Islamic finance amid its rapid growth is an important consideration for the stakeholders in the industry. On the regulation side, the comparatively more developed Islamic finance jurisdictions have forged strategic partnerships and collaborative agreements with various other regulatory bodies and global multilateral entities to share their experiences on Islamic finance development. In particular, efforts to support the unique liquidity needs of IFIs have seen solid progress in recent years, spurred by regulators and industry players efforts. Furthermore, the continued progress in supporting cross-border Islamic finance activity is commendable, given the need for domestic IFIs to grow and expand to new markets. Overall, the harmonisation of standards in the industry must also take into account the need for trained Islamic finance professional to propel the industry forward. As a growing and systemically-important component of the global finance industry, the Islamic finance model has been studied more rigorously after the IFIs weathered the global financial crisis of 2008-09 better than their conventional counterparts. Bolstered by their real-sector linked transactions and governed by Shariah principles which prohibited investments in opaque derivatives, Islamic banks did not require any government-led bailouts at a magnitude as witnessed among the top global conventional banks 5. Going forward, the increasing interconnectedness between IFIs and the global financial industry warrants a deeper look into the financial stability of Islamic finance. Source: KFH Research Limited 3 COMCEC Trade Outlook 2014 4 KFH Research Ltd 5 IFSB Islamic Financial Services Industry-Stability Report 2014 4
Key Areas in Islamic Finance for Standard-Setting Regulation and prudential capacity Adequate supply of qualified human capital Key Areas for standard-setting Supporting liquidity needs for IFIs Encourage cross-border activity Source: KFH Research Limited Financial stability. Overall, the core issue of financial stability in Islamic finance is supported by the standards issued by the Islamic Financial Services Board (IFSB), which started operations in early 2003. The IFSB issues standards on a vast range of issues in Islamic finance, such as capital adequacy, liquidity managements and many others. These standards act as non-binding guidelines for IFIs, and have taken into account cross-segment interactions between Islamic banking, sukuk, funds and takaful. The IFSB currently has 184 members 6, comprising 59 regulatory and supervisory authorities, eight international inter-governmental organisations, 111 financial institutions and professional firms as well as six self-regulatory organisations operating in 45 jurisdictions. As part of the process of dissemination of IFSB standards, the organisation provides technical assistance to member countries, where needed. 6 As at April 2014 5
At the IFSB, we are making progress towards the development of a more systematic framework of our own to support implementation. The starting point of implementation is of course the formulation of a comprehensive range of standards. The banking sector as well as the Takaful sector have received substantial coverage, and we are bringing capital markets and Sukuk under our focus. We value the commitment of each of our 184 members, we are working to address the feedback from our members which is to raise our game and enhance the support we provide to our members in the adoption and implementation of the standards that we formulate and issue. Mr. Jaseem Ahmed, Secretary-General Islamic Financial Services Board at the 2014 London Sukuk Summit 18 June 2014 United Kindom Harmonisation of global Islamic finance standards to drive the industry to greater heights The IFSB contributes to the harmonisation of global Islamic financial services industry (IFSI) through its various key organizational initiatives that primarily focus on preparing global prudential standards and assisting the countries to implement them. These prudential standards provide guidance on the best practices for Islamic finance sector that ensures a consistent approach across jurisdictions and help convergence of Islamic finance with the global financial services industry, albeit ensuring strict compliance with Shari ah rules and principles. This is to ascertain that the Islamic Financial Institutions (IFIs) will have a level playing field with its conventional counterparts in dual banking systems. Focusing on, inter alia, primary areas of prudential regulation such as corporate governance, capital adequacy, risk management and disclosures the IFSB Standards ensure greater certainty about the regulatory environment and interpretations across jurisdictions, thus minimising opportunities for regulatory arbitrage and playing an instrumental role in internationalising Islamic finance. In harmonising the regulatory practices across the globe, the IFSB s principles-based standards and guiding principles provide a flexible and implementable base to regulatory and supervisory authorities of various jurisdictions for the development of their local regulations and guidelines. The local regulators use these standards to derive the relevant principles and adopt as per the local market needs and consideration of institutional and infrastructural development. Similarly, various implementation initiatives of the IFSB help bridge the gap between the market players and their regulators, providing them an opportunity for close interaction and deliberation on the global best practices that can provide impetus to improvement in the local regulatory framework. A consistent framework for implementation of the IFSB standards across jurisdictions provides an opportunity to market players to expand to new markets and jurisdictions without a major change in their product line up and risk management framework. Recent issuance of ED-17 (Exposure Draft of Core Principles for Islamic Finance Regulation Banking Segment) is expected to further assist harmonisation efforts by bringing IFSI in the global 6
surveillance framework through IMF-WB Financial Sector Assessment Programme (FSAP) as well providing an opportunity to RSAs to involve in self-assessment of their regulatory systems and do peer reviews of other supervisory authorities. Prudential and Structural Islamic Financial Indicators (PSIFIs): Unavailability of reliable and timely data in the Islamic financial services industry (IFSI) is a major hindrance for effective regulation of institutions offering Islamic financial services (IIFS) while restricting the comparability of Islamic financial sectors across jurisdictions. To this effect, the IFSB was mandated by the Council to establish a global database on Prudential and Structural Islamic Financial Indicators (PSIFIs). The objective of this programme is to document the structural development and soundness of Islamic finance, which is benchmarked against IMF s initiative on Financial Soundness Indicators (FSIs). The PSIFI indicators are mainly classified into two groups: core prudential indicators and structural indicators. The core prudential indicators are aimed to best capture the strengths and vulnerabilities of the sector primarily focusing on capital adequacy, asset quality, earnings, leverage, liquidity and sensitivity to market risk issues. The structural indicators are the indications of the size and structure of the Islamic banking sector providing information on volume of asset, liabilities, revenue and earnings etc. In 2014, the IFSB started the new phase of the project with an ultimate objective of starting live data production of the macro-level indicators of the global Islamic finance industry. During the year, the IFSB went through a series of activities in different components of the project including capacity building programme, Task Force meeting, revision of indicators and compilation guide, and running coordinated compilation exercises by the participating countries. Currently, 16 regulatory and supervisory authorities representing major Islamic finance jurisdictions are participating in this programme, which include: Afghanistan, Bahrain, Bangladesh, Brunei Darussalam, Egypt, Iran, Jordan, Kuwait, Malaysia, Nigeria, Oman, Pakistan, Saudi Arabia, Sudan, and Turkey. The IFSB will start regular publication of these country level indicators which cover both stand-alone Islamic banks and Islamic windows on its website from Q1 of 2015. Liquidity management. Another primary challenge for Islamic finance is the lack of liquidity management avenues for IFIs, especially short-term liquidity. The availability of liquidity management instruments is an important one for IFIs to operate effectively. In this regard, central banks of several jurisdictions such as Malaysia, the UAE, Bahrain, Indonesia, Gambia and Brunei, have taken concrete measures to provide tools for liquidity management and to support the emergence of domestic Islamic interbank money markets. Nonetheless, these are mainly domestic-oriented solutions, whose efficiency are constrained by the relatively small size of the domestic Islamic finance industry. As such, the issuance of highly-rated short-term sukuk by the International Islamic Liquidity Management Corporation (IILM) could extend the scope and volume of cross-border liquidity management tools. The formation of the IILM was a significant milestone for cross-border activity, as it marked an international collaboration among several central banks To date, the IILM has issued a total of 11 series worth a total of USD6.78bln with the current outstanding amounting to USD1.85bln. The IILM, whilst providing an avenue for cross-border liquidity management, also has potentials to satisfy the Basel III requirements of the Liquidity Coverage Ratio (LCR) 7. Hence, these instruments are widely sought after as 7 Subject to regulatory acceptance by various regulators 7
International Islamic Liquidity Management Corporation Sukuk Issuances 2013 2014 Aug Nov Jan Feb Apr May Jul Aug Aug Oct Nov USD mln Tenure (Months) 490 490 860 490 860 490 860 400 390 860 590 3 3 3 3 3 3 3 6 3 3 3 Source: IFIS, KFH Research Limited solutions by Islamic financial institutions. Going forward, the IILM aims to increase its issuance size. Notably, efforts to support liquidity management in Islamic finance have also taken into account key developments globally, such as the recent Basel III requirements. Recently in November 2014, the IFSB released two new Exposure Drafts on Core Principles for Islamic Finance Regulation- Banking Segment (ED-17) and Guidance Note on Quantitative Measures for Liquidity Risk Management in Institutions Offering Islamic Financial Services (GN-6). Amongst others, the guidelines defined the types of high quality liquid assets (HQLA) that Islamic banks can hold to meet regulatory requirements under the Basel III banking standards, which is the global standard the banks are working towards. With regard to standard-setting bodies on Islamic liquidity management, the International Islamic Financial Market (IIFM) supports the standardisation of Islamic financial products, documentation and related processes at the global level. The IIFM is a standard-setting body, focusing primarily on Islamic capital and money markets. In November 2014, the Bahrain-based organisation launched a standard contract template for collateralised Murabahah transactions, as a liquidity management tool for IFIs. The contract acts as an alternative to conventional repurchase (or repo ) agreements. Similarly, the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) announced in the same month that they are working on a standard for liquidity management. Since its inception in 1990, AAOIFI has issued a total of 88 standards, mainly on Shariah and accounting. Cross-border activity. To support more crossborder Islamic finance activity, issuances of global guidelines and the signing of bilateral agreements are amongst the positive steps undertaken by industry players and their respective governments. At industry level, various efforts are being pursued to facilitate cross border arrangement between IFIs. A notable progress is the issuances of several standardised agreements to support an effective inter-bank money market transactions between IFIs. The Association of Islamic Banks in Malaysia (AIBIM), in this case, has launched several master agreements on transactions such as interbank Murabahah and for Wakalah deposits in IFIs that could be adopted by Islamic banks globally. Similarly, the IIFM also serves as a standard-setting organisation for Islamic capital and money market segments, critically issuing standards which can serve as reference points for financial engineering efforts in these sectors while further promoting cross-border harmonisation among various jurisdictions. 8
Legal recourse. On legal issues, the Kuala Lumpur Regional Centre for Arbitration (KLRCA) was one of the first arbitration centers in the Asian region to provide institutionalised Islamic banking and financial services arbitration. Given the growing number of court cases involving Islamic banks or financial transactions, financial regulators showed interest in improving the arbitration process for cases related to Islamic finance. Following this, the KLRCA i-arbitration rules was launched in 2012; it is the first set of arbitration rules in the world that adopts the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules, while allowing for the resolution of disputes arising from any contract that may contain Shariah issues. It provides an effective and enforceable dispute resolution platform for international Islamic commercial transactions; thus, providing investors and consumers with better confidence in the safety of cross-border Islamic finance transactions. In the event of arbitral awards under the KLRCA i-arbitration Rules, these awards will be enforceable in the 153 countries that are signatories to the New York Convention. Furthermore, the KLRCA-I rules extend beyond Islamic finance, and can apply to international commercial arbitration in other sectors, such as construction, maritime and oil and gas. Shariah standards. Providing greater clarity on regulatory treatment and application of Shariah contracts is among the recent developments pursued by more advanced Islamic finance markets. For instance, the new Islamic Financial Services Act 2013 in Malaysia provides the foundation for the shift towards a contract-based regulatory framework by providing legal recognition to the contractual requirements in accordance with the Shariah. In this regard, the Shariah Advisory Council (SAC) of BNM is enhancing the existing Shariah parameters on various Islamic finance contracts in order to introduce new Shariah standards that set out mandatory and optional requirements applicable in Islamic financial transactions along with guidelines on operational parameters to enable uniformity of Shariah rulings across institutions. As a result, last year in December 2013, the SAC of BNM had released the new standard for Murabahah contract while releasing concept papers for Musharakah and Mudarabah. This year in June 2014, concept papers for the contracts of Ijarah and Istisna have been released. Following consultations and public feedback, the concept papers are expected to be revised and released as standards of their own. For the IFIs, these standards support the operational practices in executing these contracts, while encouraging product innovation. On the demand side, the uniformity of Shariah rulings across institutions would enhance confidence and certainty from investors and consumers. Human capital. Ensuring quality human capital is a strategic imperative to propel the growth of Islamic finance in the face of rapidly changing market requirements and fastevolving global financial landscape. In Malaysia, the effort to promote high standards of competence and professionalism through standard-setting and quality assurance functions have been identified as critical in order to realise the vision of a highly competent and high performing workforce. As the professional body for Islamic finance practitioners, the Association of Chartered Islamic Finance professionals, which is soon to be known as the Chartered Institute of Islamic Finance Professionals (CIIF), is primed to take on the challenge of translating this vision through its founding mandate of establishing standards to raise the competency and professional bar of the Islamic finance workforce. The important work of CIIF, which is currently taking shape to mark the rollout of the 9
first phase of its standard-setting initiatives, will be complemented by the accreditation services of the Finance Accreditation Agency (FAA), whose role in assuring the quality of learning and professional qualification programmes according to standards established by CIIF, will serve as a vital component to the overarching objective of raising the standards of the Islamic financial services industry. Meanwhile, the International Shariah Research Academy for Islamic Finance (ISRA), regularly disseminate research on applied Shariah matters as reference for the industry. The road ahead: Outlook and challenges in streamlining global standards for Islamic finance Going forward, the Islamic finance industry is expected to surpass the USD2tln milestone by end-2014 8. Much of this growth has been driven by the Islamic banking industry, which accounts for 80% of global Islamic finance assets. In addition, the sukuk market (15% of total Islamic finance assets), which has seen several landmark issuances this year, will also be a major growth catalyst for the industry in the future. To date, Islamic finance segments are wellsupported by multilateral Islamic finance entities such as the IFSB, AAOIFI, IIFM and the IILM. In addition, training- and educationrelated entities such as the FAA and CIBAFI have played a part in enhancing the quality of talent for the industry. Nevertheless, there are differing standards between the member countries of these institutions, which need to be addressed. Furthermore, the guidelines issued by Islamic finance-specific bodies may differ from those issued by more established global bodies which were formed to support the conventional financial sector. As such, the need for further standardisation remains a pressing challenge for the industry, especially in light of the relative complexity of Islamic financial products, as well as the need to ensure strict compliance to the Shariah. The practices of IFIs globally needs to converge to some extent, in areas of regulation, prudential practices, accounting, legal treatment and human capital requirements, amongst others. Of importance, the IFIs must be able to compete with the conventional financial sector, which has clear points of reference for these key areas. These standards have been instrumental in ensuring that products offered across the globe are easily understood by the consumer; and for the consumer to have confidence that the financial system is well-regulated and safe. While the recent global financial crisis has proven that the prudential and safety measures are imperfect, it would be a positive step for the Islamic finance community to take it as a challenge to evolve and improve the current system. The existing standard-setting bodies are making commendable efforts and have taken into account the intensifying competition with the conventional sector, as well as the differing standards across countries. Going forward, as standards become more cohesive, the IFIs would benefit too from better consumer confidence and improved safety nets. Perhaps, these Islamic finance bodies will someday be able to command the same gravitas as the Basel standards, which financial institutions across strive for full-compliance. The dissemination of globalised and standardised Islamic finance practices may be conducted informally via multilateral development-focused institutions such as the Islamic Development Bank (IDB), the Asian Development Bank (ADB) and African Development Bank (AfDB). These institutions regularly leverage on Islamic financial instruments to support projects and 8 Source: KFH Research Ltd 10
funds in key Islamic finance jurisdictions. They have also worked to facilitate high-level discourse and cooperation on Islamic finance practices across their member countries. Meanwhile, the IDB, which was formed in the early 1970s, has collaborated with key industry players, regulators and government institutions to help the development of an Islamic finance eco-system in various jurisdictions. For instance, the IDB in a joint initiative with the IFSB and the Islamic Research and Training Institute (IRTI), has developed the IFSI Development: Ten-Year Framework and Strategies (Ten-Year Framework), consultation with a wide range of stakeholders, he aim of this joint initiative is to provide a general blueprint or guideline that may benefit national authorities in designing and developing their national plans and initiatives as part of their financial sector development policies. In 2012, the IDB signed a memorandum of understanding with the World Bank to set out a framework for collaboration between the two parties and lend support to global, regional and country efforts in the development of Islamic finance. These agreements set the stage for a more cohesive approach to developing Islamic finance in new jurisdictions. While these multilateral entities are not standard-setting bodies, they play an instrumental role in encouraging cooperation and dialogue between member countries, which may lead to more common ground in Islamic finance practices. As such, these entities are wellpositioned to help provide necessary expertise in the development of Islamic finance in new markets. Going forward, the USD2.1tln Islamic finance industry is expected to reach greater heights (2018 forecast: USD3.5tln) 9, spurred by demand from a growing Muslim population, as well as non-muslims who are interested in more ethical financial services. To better serve these needs, and to facilitate the expansion of IFIs and cross-border transactions, the streamlining of Islamic finance practices is imperative. Ongoing efforts at improving and harmonising standards on regulatory, prudential, accounting, legal and human capital matters are highly commendable, and have set the stage for a more cohesive and sustainable Islamic financial industry in the future. Global Islamic Finance Assets (2009-2018F) 4,000 USD3.5tln 3,500 3,000 USD mln 2,500 2,000 1,500 1,000 USD2.1tln 500 0 2009 2010 2011 2012 2013 2014E 2018F Source: KFH Research Limited 9 Source: KFH Research Ltd 11
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