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By Sharifah Pirdaus Syed Ali and Zairina Zainudin
KUALA LUMPUR, Aug 19 (Bernama) – Malaysia’s Islamic financial players cannot afford to work in silo in order to create a resilient, efficient, sustainable and inclusive world for everyone, said renowned Malaysian Shariah scholar Tan Sri Mohd Daud Bakar.
He said Islamic finance players also need to understand the demand and supply of the hour as well as government and regulators’ encouragement, support and inspiration to move forward and be sustainable.
He said Islamic finance started with humble beginnings, concentrating on local Islamic finance players before it moved on to attract Western-based financial institutions to join the bandwagon.
However, the new theme of focus lately has been financial inclusion and even more apt after the economic impact caused by the COVID-19 pandemic globally, said the scholar.
“We need to be brave enough to look into the current needs of the society, and consequently offer the lower cost margin of transactions and financing with the ultimate purpose of offering a financial system that benefits all, both the surplus and deficit units in the society,” he told Bernama at the sidelines of the 17th Kuala Lumpur Islamic Finance Forum (KLIFF 2022) on Aug 16, 2022.
On the incentive point, he said the government and regulators must look into ways to incentivise Islamic financial players, not necessarily in financial terms but in terms of morals and encouragement to really help the community at the current stage.
“People now need a lower cost of housing and opportunity to work. We have to create opportunities for them and banks really need to look into this matter seriously.
“Being resilient and efficient is not only about making money but also about helping the current needs of the society,” Mohd Daud stressed.
Apart from that, the scholar said Islamic financial players must also look into talent development moving forward as there had been concerns raised about the scarcity of talent in Islamic banking and finance from various departments.
Meanwhile, Mohd Daud said that he supports the idea mooted by Sultan of Perak, Sultan Nazrin Muizzuddin Shah on establishing an ASEAN institution of Islamic finance to facilitate inward foreign investment to finance infrastructure and similar projects in the region.
Sultan Nazrin said this when speaking at the opening ceremony of KLIFF 2022.
Mohd Daud explained that ASEAN countries put together the highest populace, other than China and India, with 700 million people and, as developing countries, they would still require infrastructure development expenditure such as highways, power plants and water treatment infrastructure.
“ASEAN is the place where money can be circulated almost immediately because it has the scalability, the resources and the users at the same time. There is the Asian Development Bank in Manila for the whole of Asia but there is none for ASEAN countries and especially for Islamic financing.
“Having such a financial institution is strategic because we are geographically located next to one another. We understand each other and are very stable. The coalition for the past many years have been doing so many things together in sport and entertainment so why not in terms of financial,” he said.
For the initial step, Mohd Daud said the Malaysian government needs to embrace this idea by seeing the value of such an establishment and for those at the Secretariat level at ASEAN to bring forward a white paper to the ASEAN working committee.
Highlighting the need for collaborations, there had been calls at KLIFF 2022 for Malaysia to work closely with Indonesia to expand and promote Islamic financial systems globally.
In response to that, Bank Negara Malaysia (BNM) said Malaysia welcomes cooperation with the global Islamic financial community for the development of Islamic finance at the regional and global levels.
BNM said it would continue to implement and strengthen financial ties and cooperation between Malaysia and Indonesia as well as other countries to support the development of Islamic finance.
One of the main components of cooperation with Indonesia includes efforts to enhance the role of Islamic finance to support halal trade activities between the two countries as well as other regional trade partners, said the central bank.
It added that the presence of Malaysian financial institutions in Indonesia and vice versa would provide benefits to both countries to intensify this cooperation.
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