Tuesday, February 12, 2008

Jordan opens door to Malaysian takaful players

By Habhajan Singh
Malaysian takaful players hoping to penetrate the Middle East and North Africa (Mena) market should consider Jordan as a starting point, says a regulator from the country.
Dr Bassel Hindawi, director general of the Insurance Commission of Jordan, says Jordan, through its geographical advantage and well-established regulatory system, should prove attractive for Malaysian takaful players who are considering expansion into the Middle East region.
"They can consider using Jordan as a regional hub to either start a foreign operation or to oversee existing operations in the region. The regulatory system we have in place is a dual system covering both conventional and takaful.
"From an investment point of view, we have no restrictions on foreign ownership. So it is left to investors to decide how they wish to operate," he told The Malaysian Reserve in a interview in Kuala Lumpur recently.
Hindawi, who is also president of the International Association of Insurance Fraud Agencies (IAIFA), noted that takaful is growing at a rate of 20% to 25% annually within Mena.
"Looking at the big picture of growth, it is prudent, from a business point of view, for Malaysian takaful players to seriously consider establishing their presence in Mena, either through joint ventures or stand-alones," he said.
According to a Standard & Poor's Ratings Services report, if the world average insurance premium of US$550 (RM1,776) per capita is achieved, the Gulf Cooperation Council (GCC) insurance market could be worth up to US$20 billion.Globally, takaful is expected to be worth between US$7.4 billion and US$14 billion mark by 2015, with the Middle East expected to be a major driver of growth. Dr Hindawi said that the commission intends to promote both conventional insurance and takaful."
Obviously, the potential for growth and development of takaful across the region is huge," he said. Dr Hindawi said one of the challenges faced in the development of takaful is the lack of a uniform standard.
"For takaful to continue to develop and reach its potential, there has to be a level playing field for takaful in all markets," he said.
He outlined two necessary precursors for this to happen. He said the first is the creation of a uniform standard, noting that the on-going work of global standard-setting Islamic Financial Services Board (IFSB) will lead to that.
The second "major challenge" is the consistency of Shariah interpretation from one jurisdiction to another, he said.
"Right now, even at the national level, you have different interpretations from one company to another. I would propose each jurisdiction has a central council to provide oversight and guidance for Shariah scholars at the national level," he said.
He also described Bank Negara Malaysia's Shariah Advisory Council as a "major plus for Malaysia." It is understood that Jordon does not have such a committee yet.

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