Lahore is considered as the “Heart of Pakistan” and its people are known for their “big heart.” For a few years now, Lahore has opened itself to the global community of Islamic economics, banking and finance (IEBF). Lahore University of Management Sciences (LUMS) received a grant from State Bank of Pakistan (SBP) to set up a Centre of Excellence for Islamic Finance but has yet to make a mark in this field. More prominent universities, however, are COMSATS Institute of Information Technology (Lahore Campus of COMSATS University), University of Management & Technology (UMT), and Minhaj University Lahore (MUL), which have shown greater commitment to IEBF. CIIT and UMT have organised annual international conferences in this field for a few years, and now MUL has entered this field by announcing its 1st World Conference in Islamic Economics and Finance to be held on January 3-4, 2018 at Pearl Continental Hotel, Lahore.
Given the growing activities around IEBF, the government of Punjab should leverage on this by adopting it as a strategic area to promote Lahore as a global Centre of Excellence for IEBF. SBP should also play its role to audit the activities of the so-called Centre of Excellence in Islamic Finance at LUMS, as it has so far failed to register itself as a serious player in this field. In view of many industry observers, CIIT and UMT have shown far more commitment to IEBF than LUMS, and SBP should reconsider its support for LUMS and instead start supporting those institutions that are more committed to the cause of IEBF. LUMS was chosen ahead of International Islamic University Islamabad (IIUI) and CIIT, of which the last one has certainly beefed up resources in IEBF, and is very active in promoting education in this area through its regional campuses throughout the country.
The provincial government of Punjab has a greater role to play. It should set up a task force under the leadership of a renowned Islamic finance expert of international repute, with an objective to identify opportunities in IEBF, which could be exploited to attract foreign capital into the Punjab in general and Lahore in particular.
It is also incumbent upon the government of Punjab to show its commitment to IEBF by way of initiating full conversion of the Bank of Punjab into an Islamic bank.
There is also a greater need to incentivise Islamic banks in the country to relocate their headquarters to Lahore, which is fast becoming centre of activities for many economic sectors.
Lahore can also be chosen to set up what may be called as Lahore International Islamic Financial Centre (LIIFC). The proposed LIIFC should offer incentives to Islamic banks, asset management companies, takaful operators, and microfinance institutions from around the world to domicile their businesses in an Islamic financial free-zone set up on the lines of Dubai International Financial Centre (DIFC). To gain prominence in IEBF, the government of Punjab must develop a vibrant Islamic capital market. This can be done by regularly issuing international, national, provincial, and municipal sukuk. Given the huge infrastructural developments in the province, infrastructure sukuk have a potential to play in the economic development of the province. With a population of over 100 million, Punjab offers an attractive array of investment opportunities.
There is no doubt that a city like Lahore cannot compete with the likes of Kuala Lumpur, Dubai and Bahrain, which have far superior infrastructure for operations of Islamic banks and financial institutions. However, the government of Punjab has an opportunity at hand to develop Lahore as one of the competing centres of excellence for IEBF. To do so, it must start cooperating and collaborating with the institutions and other market players in the well-established centres of excellence for Islamic finance. Annual conferences and seminars are good starting points but the ball should not stop there. A detailed and comprehensive strategy to follow up on the networking and connections should be devised to ensure positive and sustainable outcomes of such advocacy events.
The government officials and provincial politicians are least visible in the conferences on IEBF, organised by the universities in Lahore. Such a lack of interest should be changed into a genuine commitment to IEBF on part of the provincial government.
