Often
times, when a general election draws near, I usually get a bit nostalgic and
proud of what my country has achieved within 56 short years as an independent
and sovereign nation.
It also gets me excited about what else we, as
Malaysians, can do to better ourselves as a nation of dreamers and builders.
Naturally,
as a Malaysian who has been involved in the Islamic finance industry globally,
I am especially proud of what my country has achieved in this field over the
years. The industry’s humble beginning in Malaysia started formally in 1963
when Lembaga Tabung Haji was established by the government to facilitate
savings among Muslims in a Shariah-compliant manner to prepare for their haj.
I
am too young (since I was not born yet at that time) to know what actually
transpired then but I am glad it did happen because it led to the creation of
the first regulated licensed Islamic bank in the world, Bank Islam Malaysia
Bhd, 20 years later. A great many things happened after that, including the
establishment of the first licensed takaful company in the world, the first
licenced Islamic window operations and the first licenced Islamic asset
manager.
Islamic finance was the epitome of the democratisation of the
financial market in Malaysia. It brought about real financial inclusion for
all.
There
are just too many deliberate and structured developments that the industry
players, the government of the day and the financial regulators did since then
to develop the industry for me to mention here. As such, suffice for me to say
that they were generally positive developments that helped propel Malaysia
further as a global leader in the industry every step of the way.
Nonetheless,
what I will identify as the most important development made, which helped
changed the world’s view on Islamic finance, is the institutionalisation of a
comprehensive legislative, regulatory, legal and Shariah framework for the
industry in Malaysia — the first of its kind since the fall of the Ottoman
Empire in the early 20th century. I dare say that this can and should be
considered as one of the most significant paradigm shifting events in mankind’s
modern hi story. Al l Malaysians should hold their heads high for this
contribution to modern civilisation.
Thirty
years passed and today, as a result of the comprehensive framework established,
Malaysia has become the largest, deepest and broadest Islamic finance market
anywhere in the world with the most comprehensive product offerings — from the
simplest basic savings product to the most sophisticated investment products
for everyone and anyone in the country, be they individuals or corporate
bodies, residents or foreigners, Muslims or non-Muslims.
As
I contemplate on what to expect in Malaysia post the 13th General Election
(GE13), I can’t help but be excited with the prospect of Islamic finance moving
forward. The reason for my excitement is because finally after 50 years of
existence in the country, Islamic finance is being given the needed facelift
and makeover.
Unbeknown
to many, come May 2, 2013, the comprehensive legislative, regulatory, legal and
Shariah framework that has propelled the Malaysian Islamic industry to be where
it is today will be overhauled, refreshed and strengthened in the much awaited
Islamic Financial Services Act (IFSA).
Malaysia’s
Islamic finance industry is ready to move forward.
The new IFSA, read together
with the Central Bank Act (CBA), provides a much stronger and more effective
platform for Islamic finance, unparalleled with any other platform anywhere
else in the world.
Islamic finance is now, for the first time, completely
institutionalised as a component of the Malaysian financial market by
parliamentary legislation.
Its future posterity and prosperity cannot be
subjected to the whims and fancies of any individual who may or may not believe
in Islamic finance.
Any
fundamental change in the industry must now be congruent with what Parliament
has set and if it is not, then only Parliament can make the change.
The
sanctity and certainty of Shariah management and governance in the industry has
also been embedded and institutionalised comprehensively in parliamentary
legislation.
The IFSA and the CBA clearly define the different duties and
responsibilities of all parties in the industry in regard to Shariah-compliance
and help clarify the relationship between the financial regulators, the
licensed financial institutions and the Judiciary. It is the first time such
thing has ever been done in the world. As a result, the certainty of doing
business in the Islamic finance industry will be better than ever and will
provide a very conducive platform for the industry to grow bigger and better.
Perhaps it is time people look at doing global sukuk issuance under Reg S or
144A using Malaysian law instead of English law.
I
anticipate there will be a period of adjustment for the industry in Malaysia as
we take in the various changes that the industry will have to go through post
the IFSA.
Once everything settles down, I foresee many new product offerings
coming up and the Islamic financial institutions attaining a more enhanced
competitive edge in the market vis-a-vis conventional riba-based financial
institutions. I see the industry entering into its next 50 years of development
with a renewed confidence and clearer sense of destiny.
Yes!
Our country’s GE13 is coming and as much as I am intrigued like everyone else
about the possible outcome of our democratic election, the one thing that I am
sure of is that irrespective of the election result, our Islamic finance
industry is poised and ready for more great things. I would urge all my fellow
proponents of Islamic finance to be ready for the next push.
[Badlisyah
Abdul Ghani is the executive director and chief executive officer of CIMB
Islamic Bank Bhd]
