Overview of Islamic Finance Education in Malaysia

The current economic reality of tougher regulations, technological advances, demographic shifts, digital lifestyles and work style revolutions, is putting greater emphasis on establishing a larger pool of competent Islamic Finance professionals to meet the increasing market share of the Islamic Financial Services Industry (IFSI). Currently, Islamic Finance contributes 11% of total employment to the IFSI worldwide, with an estimation of one (1) million professionals required by 2020.1

In Malaysia, the growing momentum of IFSI suggests that a significant portion of the remaining workforce of 56,000 to be employed by the Financial Services Industry (FSI) by 20202 will comprise Islamic Finance professionals. Through the Economic Transformation Programme (ETP), student enrolment in Islamic Finance will increase from the current 6,000 students to 54,000.3 The ETP also targets to increase the number of employable Islamic Finance graduates from 64.8% to 80% by 2015. The recent establishment of the Financial Services Talent Council will be pivotal in developing, attracting and retaining talent in the sector through engagements with the FSI, the private sector, as well as education and training institutes.

A report on Global Islamic Finance Education 2013 by Yurizk indicates that, whilst the Asian region hosts about 43% of the global Islamic Finance education and knowledge service providers, Malaysia ranks behind Pakistan as the second highest Islamic Finance education provider with over 86 institutions offering Islamic Finance education, of which 48 are academic institutions. Malaysia ranks highest amongst 38 providers for professional development programmes including certification, training, seminars and workshops.4 These notable institutions include Islamic Banking and Finance Institute Malaysia (IBFIM), International Islamic University Malaysia (IIUM) and the International Centre for Education in Islamic Finance (INCEIF). Besides academic programmes, a number of professional-based and certification programmes are offered to cater to the needs of the IFSI.

Malaysia is also recognised to be at the forefront of research with the setting up of the International Shariah Research Academy to promote applied research in the area of Shariah and Islamic Finance. The Academy acts as a repository of knowledge for Shariah views and undertakes studies on contemporary issues in the IFSI.

Attempts have been made to professionalise the Islamic Finance practitioners through the setting up of The Association of Chartered Islamic Finance Professionals (ACIFP). Besides serving as a professional membership body, ACIFP also aims to conduct Continuous Professional Development programmes for its members.5

Issues and Challenges in Developing Human Resources in Islamic Finance

Despite much effort spent on Islamic Finance education and training, there remains numerous challenges to be addressed, particularly in integrating education and training with the requirements of the IFSI, as well as streamlining the standards between academic and training programmes. Programme Standards for Muamalat and Islamic Finance have since been developed through the Malaysian Qualifications Agency (MQA) for academic programmes. However, this is not the case for professional-based learning and certification programmes. While professional-based and certification programmes enjoy a larger industry participation and feedback, academic programmes have a larger audience of future practitioners. This creates a gap in terms of fulfilling the competency requirements of the IFSI. The current scenario requires closer collaboration between the academia and IFSI as envisaged by Bank Negara Malaysia6 in order to bridge this gap.

The matter is made more complicated by the fragmentation of Islamic financial regulations and the extreme variation with which Shariah principles are interpreted and implemented within and amongst jurisdictions. This considerable variation creates obstacles to effective training and knowledge transfer. This is particularly an issue for countries implementing Islamic Finance without a Global Shariah Advisory Council. It is evident that although the Islamic Financial Services Board (IFSB) has been issuing standards and principles relating to the IFSI, collaboration amongst member countries remains insubstantial. This provides little help in designing and developing education and training curriculum based on globally benchmarked standards.

The aforementioned challenges point to two conclusions. One, although some of the challenges are specific and local in nature, they are to a certain degree universally intertwined. For instance, education and training could be received by Islamic Finance professionals in Malaysia but who practice across jurisdictions with different interpretation of Shariah principles. Hence, a global approach presents a more practical solution in addressing the issues. Second, there is a need for an international accreditation body for the IFSI. Although many countries have their own respective quality assurance agencies in higher education (the MQA, in the case of Malaysia), the absence of a subject-specific and professional accreditation body for finance (or more specifically, Islamic Finance) does not allow quality assurance and standardisation of Islamic Finance programmes across jurisdictions to be made possible. Such a setup is viewed as timely and highly critical in view of the unprecedented developments in the IFSI where availability and capacity of talent become a key concern.

Finance Accreditation Agency at a Glance

Formed in August 2012, the Finance Accreditation Agency (FAA) is an international and independent quality assurance and accreditation body for the FSI. FAA is mandated to contribute to the FSI through the following functions:

  1. Establish quality assurance and accreditation framework and criteria;
  2. Accredit programmes, institutions and individuals that fulfil the set criteria and principles;
  3. Promote and implement recognition of learning standards and practices;
  4. Maintain and administer the Finance Qualification Structure for the FSI;
  5. Register and maintain FAA approved training providers and/or accredited learning programmes and qualifications, institutions and individuals in the FSI;
  6. Seek global recognition of learning and qualifications;
  7. Facilitate the recognition and articulation of learning programmes and qualifications through mutual recognition initiatives; and
  8. Seek accreditation and strategic alliances with world-renowned accreditation agencies and relevant institutions.

In line with its vision of becoming a global leader in ensuring quality learning in the FSI and its mission to inspire and promote the highest quality in continuing education and professional development for the FSI through its globally benchmarked accreditation framework, standards and practices, FAA provides national and international financial institutions and practitioners with an effective way to regularly and consistently examine and improve quality of learning offered to financial institutions. This is to ensure that the learning programmes provided by education and training institutions meet globally acceptable levels of quality.

FAA adopts a vigorous accreditation process to enhance the competencies of Islamic Finance professionals through its various products and services. The FAA Programme Accreditation is guided by the FAA Quality Framework (FQF), FAA Learning Criteria (FLC) and industry competency requirements so as to ensure that education and training programmes meet the requirements of the IFSI.

The FAA Learning Standards (FLS) were developed to make it possible for Islamic Finance professionals to practise across jurisdictions. Termed as minimum standards, the standards enable learning programmes in various sectors of Muamalat, Takaful, Islamic Capital Market and Islamic Corporate Programmes to be designed, developed and delivered across jurisdictions, thereby reducing the differences in programme offerings. The FLS maintains a high degree of flexibility in allowing the different interpretation of Shariah principles to be acknowledged and covered, taking into account the requirements of different standard-setting bodies such as IFSB and the Accounting and Auditing Organisation for Islamic Financial Institution (AAOIFI). As such, participants are expected to be appreciative of the different settings and accommodate the differences in their job functions. The substantial involvement of IFSI practitioners locally and internationally in the development and moderation of the FLS signify international recognition and industry relevance standards. To some extent, prominent academics have been involved in the moderation of the FLS in order to ensure that the FLS is aligned with academic programme standards for Muamalat and Islamic Finance.

Related to the FQF and FAA Programme Accreditation initiatives is the development of a Finance Qualification Structure (FQS). Taken together with the FQF, FLC and FLS, the FQS harmonises and integrates all qualifications (in this context, the IFSI) into a single framework. This integration allows for mutual recognition of the FQS from other accrediting bodies, both locally and abroad. A more direct implication is the recognition of Islamic Finance programmes across jurisdictions.

The FAA Recognition of Learning (FRL), through the FAA Individual Accreditation initiative, allows individuals in the IFSI to be mapped to the FQS based on their competency levels (knowledge, skills and applications), thus facilitating their movements in the IFSI. The FQS not only allows Islamic Financial Institutions (IFIs) to determine the suitability of training programmes for their employees, it also facilitates the career and academic mobility of IFI employees.

Moving Forward

Islamic Finance will continue to draw significant attention from regulators and practitioners due to its continuous and unprecedented growth. Although growth figures and demand dynamics vary from country to country and from institution to institution, there is a consensus that the sector lacks Islamic Finance professionals as current competencies are largely characterised by the education and training programmes received.

It is against this backdrop that FAA is formed, with the mandate to overcome the issues and challenges in developing human resources in the IFSI. To achieve its mandate, FAA cannot function in isolation without the support of regulators, training providers (including academic and training institutions), IFIs and IFSI practitioners. At the same time, a paradigm shift is required to recognise the role accreditation can play in contributing to the development of human capital in the IFSI. FAA is envisaging a bigger role in the near future, particularly with the emergence of many subject-specific accreditation bodies across the world to support national quality assurance agencies. Being the only accreditation agency in Finance, and Islamic Finance in particular, it has what it takes to be the de facto accreditation agency for this sector.

1 Malaysia International Islamic Financial Centre (MIFC), Human Capital Development: Sustaining the Growth of Islamic Finance, MIFC, 2013.
2 Bank Negara Malaysia, Financial Sector Blueprint 2011-2020.
3 Economic Transformation Programme (ETP), EPP7: Building an Islamic Finance and Business Education Centre, 2013.
4 Yurizk, Global Islamic Finance Education 2013 Special.
5 The Association of Chartered Islamic Finance Professionals, http://www.acifp-global.org/.
6 Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Launching of IBFIM’s Islamic Finance Qualification Framework & Progression Route (IFQFPR) ‘Talent Development in Islamic finance over the next decade’, Kuala Lumpur, 14 December 2014.

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