KUALA LUMPUR: An integration between the halal sector and Islamic finance will create a combined industry worth US$3.5 trillion as compared to US$2.35bil if they were to be developed independently of each other, said Edbiz Consulting Ltd United Kingdom chairman Dr Humayon Dar.
Speaking to delegates at the Global Islamic Finance Forum 2012 (GIFF), Dr Humayon said the actual combined amount of both halal industry and Islamic finance worked out to be US$2.35bil but the integration actually worth more at US$3.5bil due to the greater potential following the synergy.
GIFF 2012, themed “Internationalisation of Islamic Finance: Bridging Economies”, is hosted by Bank Negara.
“The halal industry will be looking for financial capital. Its size will become more noticeable if combined with Islamic banking,” he explained, citing that “one plus one is more than two”.
“These two industries have developed independently although the denominator is Muslims,” he said.
He also said that the combined sector should be regulated as the halal industry was not as highly regulated compared to Islamic banking. Halal products include food, pharmaceuticals and cosmetics.
“This would bring integrity to the halal industry and Islamic finance,” he added.
He suggested the Islamic finance sector to lead the regulation of the combined platform due to the nature of the industry, which had already been highly-regulated.
Thomson Reuters United States global director (Islamic finance) Rushdi Siddiqui said the focus of Islamic finance should be the products and services instead of the religion.
He proposed for the private sector to lead and fund the regulation while the government supported the initiative.
“Islamic finance has to fit into the existing regulatory environment and not the other way round,” he said.
The speakers also noted that different countries have different frameworks in terms of compliance. It is best for one to study the suitability of the model locally before deploying the framework.
Rushdi said indigenous authenticity was important to bring about financial inclusion.
“The world is looking for a new class of asset management … information intermediation has to be efficient and the process is the most important,” he said.
Islamic banking contributed 80.9% to Islamic finance assets worldwide, sukuk 13.5% and Islamic funds 4.5%, she said.