The legal fraternity in Malaysia should pay more attention to serving the Islamic finance industry, which is suffering a brain drain to more lucrative markets such as the Gulf Cooperation Countries, Zaid Ibrahim & Co head of Islamic Financial Services Practice, Madzlan Hussain, said.
The lack of law firms and lawyers involved in Islamic banking and finance in the country opens up opportunities for an enlargement of the playing field and calls for the right institutional programmes to produce the necessary manpower, said Madzlan.
“While we claim that we are one of the biggest sukuk markets in the world, there are not more than a dozen lawyers in the country that can handle sukuk transactions,” Madzlan said.
He said with the growth of the Islamic finance industry, legal fraternity should look at ways to encourage a greater segment of lawyers to join the sector with the right incentives.
“It is imperative that Malaysia create the right framework and incentive to ensure that there are sufficient qualified people in the industry, that is if Malaysia is to further impose its dominance as a leading international financial centre,” Madzlan said in an interview with The Malaysian Reserve.
He said while the legal infrastructure in the country for Islamic Finance is strong, there is still room for improvement. “We need to look at both the hardware and software of the legal framework and enhance it,” he said.
He said the hardware legal framework entails having suitable laws and framework which is adequate but the software entails having the right people to manage the software and there is a shortage resource in this area.
Malaysian regulators have set the bar higher for Islamic finance and takaful industry, preparing to release a brand new legal framework for Islamic finance in 2013.
The new legal framework is expected to further liberalise the industry, and will encourage more firms and lawyers to be involved in the legal aspects of the industry.
Malaysian Islamic finance regulators, such as the Islamic Finance Services Board, have also introduced new rules over the last two years, aiming at giving a boost to the Islamic finance sector, which Malaysia has set to become a new growth sector for the nation’s economy.
However, these plans will be hurt by the dearth of talents, and the lack of incentives for local law firms to be interested in the industry.
Mazdlan said the biggest challenge for the industry is having adequate human capital that can help Malaysia spur the growth of the industry.
“We have not done enough or fast enough towards creating adequate human capital in the industry,” he said.
“Malaysia has to invest sufficiently in education and training to create the right kind of people in the industry. We need to increase our investment in education and training,” he said.
He said the biggest challenge for Malaysia will be the internationalisation of the industry where we can create sufficient pool of talents not just for the country but also export our talents to other countries with Islamic jurisdictions.
“Right now our talents are being pitched and if we don’t replenish them sufficiently, than the dearth of talent pool in the industry can retard our progress towards becoming a successful Islamic hub in the world,” he said.
*This article was published by The Malaysian Reserve. Read the original article here.