Financial Outlook of the OIC Member Countries 2016
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4 ISLAMIC FINANCE
The concept of Islamic or Shari’ah compliant finance is based on core tenets of Islam
concerning property rights, social and economic justice, wealth distribution, and governance.
One of the key features of the system is prohibition of riba (interest) and gharar (ambiguous
contracts or deals) (Modieldin, 2012). Iqbal and Mirakhor (2011) identified the basic
principles of an Islamic financial system are as following:
 Risk Sharing
 Asset-based
 Money as “potential” capital
 Prohibition of speculative behaviors
 Sanctity of contracts and the preservation of property rights
Given the industry’s current size and composition, although Islamic finance is still a niche
market in the overall global financial industry, Islamic financial services industry is one of the
fastest growing components of the global financial industry. On the other hand, there are some
challenges and obstacles that the industry faces such as; weak regulatory systems, inadequate
Shariah governance infrastructure, inadequate necessary institutional infrastructure, and etc.
Therefore, to overcome this challenges and obstacles, and to satisfy the (potential and current)
demand, there is an obvious need to increase public awareness, to build a stronger financial
infrastructure and means of enforcement of transparency and adherence to Islamic law and
principles (Hassan, 2016).
Given the importance of the Islamic Finance, it is on the agenda of the COMCEC, consequently
also on the agenda of Financial Cooperation Working Group. In line with the relevant
resolution of the 31st Session of the COMCEC, the 6th Meeting of the Financial Cooperation
Working Group was also served to the preparations for the Ministerial Exchange of Views
Session of the 32nd COMCEC Session to be held with the theme of the “Developing Islamic
Finance Strategies in the OIC Member Countries”. During the Meetings participants hold a
discussion on the said theme and developed a set of policy recommendations to be submitted
to the Ministerial Exchange of Views Session of the 32nd Session of the COMCEC (Box 2).
Box 2. Draft Policy Recommendations to be submitted to the Exchange of Views Session of
32nd COMCEC Session
The 31st COMCEC Session decided on “Developing Islamic Finance Strategies in the OIC Member Countries” as the theme
of the Exchange of Views of 32nd Session of the COMCEC and requested the COMCEC Financial Cooperation Working
Group to come up with policy recommendations on the aforementioned topic and report it to the 32nd COMCEC Session.
In this framework, the participants, in light of the discussions taken place during the 6th Meeting of the COMCEC
Financial Cooperation Working Group and research report prepared specifically for this Meeting, have come up with the
following challenges and problems as well as the possible policy options with regard to developing Islamic Finance
Strategies in the member countries.