Islamic Finance In Malaysia Case Study

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Islamic Finance challenges in Malaysia
The Islamic financial system has grown tremendously and developed into a comprehensive market place in Malaysia since it first emerged in the 1963 and now has evolved into a viable component of the overall financial system. The Islamic financial system has also witnessed an increasing recognition and widespread appreciation. Based on financial sector blue print 2011-2020, Islamic finance is one of the key achievements of which intends to build a high value-added and high-income economy by internationalization of Islamic finance and development of Malaysia as an international Islamic financial centre. However, Islamic Finance face a significant and a considerable number of challenges in order to allow
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As a result, human capital will tends to move to conventional banking as they think there is a more demand and remarkable profitability in conventional banking. Subsequently, Islamic Finance and Banking industry require higher cost in order to overcome the acute shortage of human resources in Islamic Finance. This has eventually lead to a higher cost to support the growth in Islamic Finance. In the presentation made by managing director of Bank Islam, “ISLAMIC BANKING: THE LESSONS AND CHALLENGES STRICTLY PRIVATE & CONFIDENTIAL IN MALAYSIA & BEYOND”, it has brings out the facts that cost-to-income ratio is rising continuously as we can see in the graph. ( Refer to Appendix 1). It indicates that there is a ballooning operating costs for Islamic banks, when compared to relative cost stability for the overall banking system. This is due to many causes which include the higher human resources and related expenditure in order to provide more experts and professional in Islamic…show more content…
They should educate customers by public seminars and discussions regarding the benefits that Islamic Banking system in some aspects provides better value and serves as an alternative financial approach that is not limited for Muslims but any religion. With these approaches, Islamic Financial institutions in Malaysia can gain more popularity and further enhance the system to a better financial market place.

Dr Amat Taap Manshor proposed that the scarcity of human resources in Islamic Finance i an ongoing problem and there isn’t specific timeframe whether the issue can be resolved, thus continuous effort from all parties is needed. (The Star Online, 2015). Malaysia should seeks to become a centre of talent developer and supplier instead of just acquiring them. The most efficacious ways to overcome this issue is to establish centres of talent development in Islamic Finance. Business schools are suggested to offer Islamic Finance qualifications to create new Shariah experts and professionals that has a right matching between skills training in schools and market needs. In this matter, industry-based training and education are a well

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