The research outfit funded and backed by an endowment from Bank Negara Malaysia (BNM) will conduct research concerning issues in the fast-growing field of Islamic finance and support existing local and international standard-setting bodies.
The size of the global sukuk market, including sukuk denominanted in local currencies, stood at approximately US$82 billion (RM262.72 billion) as at end-2007.
Mohamad Akram said key early initiatives to be undertaken by the ISRA are bridging the perceived gap between the Shariah views of Malaysia and the Middle East, promoting new Shariah based products through innovation, inculcating a sharing culture among industry players and conducting market relevant research for Islamic finance.
On the matter of standard setting, he said the body will play a supporting role and would not be issuing fatwas or religious edicts for the industry. Key laws for the local Islamic finance industry are the Islamic Banking Act (1983) and the Takaful Act (1984). Under the Central Bank of Malaysia Act 1959, BNM established a Shariah Advisory Council (SAC) which is the final authority relating to Islamic banking, finance and takaful.
"We will also support our national Shariah Advisory Council on issues that they want us to conduct research on. If the Majlis Fatwa wants us to research something, we are open," Mohamad Akram said. "But our research will be confined to matters related to finance. One key point is for us to be practical. The research has to be market driven, not purely academic. "We have set the target of 70% market-driven research, (and) 30% academic research;' he added.
The Islamic Financial Services Board (IFSB) was established in Kuala Lumpur in 2002 to develop international prudential regulatory standards globally to enhance the soundness and stability of the Islamic financial system. BNM is the IFSB's founding member together with more than a dozen other full members comprising central banks as well as monetary and supervisory authorities.
The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the Jeddah based Islamic Fiqh Acad-'emy (IFA), which is under the banner of the Organisation of Islamic Conferences (OIC), are also key outfits in the area of regulatory development on the global front. The AAOIFI has so far produced some 70 standards on accounting, auditirig and governance, in addition to a code of ethics and Shariah standards. It is also working on preparing new standards and redrafting current ones, taking into account all the newly emergent requirements and needs of Islamic financial institutions throughout the world.