DIFC seeks to boost Islamic finance education

By Tamara Walid and John Irish
DUBAI (Reuters) - Dubai International Financial Center plans to set up a board to encourage education in Islamic finance, an industry that is likely to grow by 15 to 20 percent this year despite the financial crisis, it said on Monday.
With large conventional banks increasingly venturing into the Islamic arena, more educational and training resources were needed, Nik Norishky Thani, executive director of Islamic finance at Dubai's financial free zone, told the Reuters Islamic Banking and Finance Summit in Dubai.
The DIFC wants to see an international standard established for courses specifically focused on Islamic banking.
"The first step is actually to bring in education providers that we have good strong links with. We will start with having an Islamic finance education board and this will be the main platform for doing a number of interesting things," Thani said.
The Islamic finance industry has grown into a $1 trillion global industry, guided by ethical investing under Islamic law, but recent poor earnings by Gulf Islamic banks due to huge exposure to the ailing property sector have thrown the regulation of the business into the spotlight.
The DIFC is putting together a guide on sukuk, or Islamic bonds, to help potential investors navigate the types of products that are available around the world.
After an emerging focus on real estate investment trusts (REITS) last year, when the region was still in the midst of a real estate boom, the DIFC was also considering issuing a REITS guide. But Thani said that idea had been shelved pending a recovery in the property sector.
Islamic banks were exposed to the property downturn as the principle of Islamic finance means loans are linked to physical assets such as real estate.
"When the property market is down nobody wants REITS," he said. "We will gauge the demand if there is a need to move in this direction, REITS for example ... but now I think we need to revive the sukuk market."
Despite their exposure to the property downturn, Thani said he did not expect to see any Islamic banks failing as the nature of their business means they avoid speculative investments and toxic debt.
"There is no reason why we will not see 15 to 20 pct growth and I would expect the new players in the market such as Hong Kong to knock on the doors of Islamic finance as a new way of raising capital," he said.
(Editing by Sam Cage and David Holmes)