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that either need to be developed or adapted, keeping in view the requirements for Shari‘ah
compliance.
The Ten-Year Framework formulated in 2007 elaborates a roadmap for the development of the
Islamic finance industry for the next ten years. A mid-term review of the Ten-Year Framework
was conducted in 2013, which suggests that the IFSI has shown great resilience in the face of
recent tribulations in the global financial industry, especially in comparison to the
conventional financial industry. However, the IFSI has not been entirely immune to the recent
global financial crisis. A mid-term review of the Ten-Year Framework by the IFSB, IRTI, and IDB
Group revealed that there was still a great deal of work to be done at the halfway point to
achieve the goals set out in the recommendations of the Framework. While there has been
much discussion surrounding the Framework, implementation has been a challenge. By
grouping the 13 recommendations and an additional three new recommendations into three
categories (enablement, performance and reach), the IFSB, IRTI, and IDB Group proposed over
70 initiatives to foster better implementation of the recommendations. The 70 initiatives were
narrowed to 20 key initiatives using key performance indicators (KPIs).
Opportunities for cross-border investments are limited due to the lack of generally accepted
standards for Islamic finance, thus putting IIFSs at a competitive disadvantage to their
conventional counterparts. Principle-based rules are needed, rather than ad hoc rules.
According to the Islamic Research and Training Institute (IRTI), there has been good progress
made on the Ten Year Framework’s recommendations with regards to improving the legal and
regulatory frameworks in various countries (A Mid-Term Review 7). Cross-border
harmonization will require the proper infrastructure to create the linkages within and
between countries.
Developing standardized Shariah compliant products is very important. The mid-term review
of the Ten-Year Framework identified three indicators to determine the level of progress in
Shariah harmonization in product development. First is the number and usage of standardized
products with published structures and contracts. The second indicator is the volume of
published research on product innovation and standardization. The third is the number and
use of innovative products (A Mid-Term Review 106).
There are three goals of Islamic corporate governance (CG), of which two are similar to
conventional CG and one is unique to Islamic CG. Like conventional CG, Islamic CG includes
protecting stakeholder interests and achieving the company’s objective. Islamic CG includes a
third factor, which is to adhere to Shariah principles.
Capitalization in the Islamic finance industry is a small in light of the whole financial industry.
Few Islamic finance institutions are strongly capitalized and capable of expanding outside of
their home country. In addition, Islamic banking institutions are perceived as less efficient in
establishing capital, compared with conventional financial institutions. NBFIs fare better in
comparison, with equity of USD 248.5 million and assets of USD 638.6 million.
Increasing financial inclusion is important, as it can reduce inequality. Financial exclusion
transpires in two ways: those who are involuntarily excluded, and those who voluntarily