Questions from Islamic Banker Asia Magazine

Islamic Banker Asia Magazine posted me three questions as below on 29/9/2014. Immediately after the questions are my answers. I do not know what they want to do with the answers. 

QUESTION 1:

Recently, we have heard a lot about the why it is advisable to bring Halal industry into the banking industry. This issue was mentioned during the recently held Global Islamic Finance Forum 2014. In your views, how this would help to raise integrity for both industries and pioneer inroads for Islamic finance, specifically into new emerging markets? And what role does Shari'a scholars such as yourself play in this initiative?

Answer:

With the desire to increase the assets of Islamic banking and finance, Halal industries which are hitherto produced and operated largely by large and multinational corporations (mostly owned by non-Muslim companies), it is a wise decision to create a symbiosis between the two. In my view it is more a kind of strategic financial planning rather a technical Syariah issue. But of course the measure is within the scope of the general purpose of the Shariah or maqasid. And as such it is upon the Muslim government to stimulate, nurture and if necessary introduce rules and laws to favour the collaboration and esprit de corps between these two economic agents.

QUESTION 2:

As we all aware, assets managed by the Islamic financial industry is currently about 1% of total banking assets globally and majority of the assets are concentrated in the muslim majority countries - such as the GCC. What steps should Islamic banks implement to attract and engage more non-Muslim entrepreneurs to utilise Islamic finance?

Answer:

To concentrate more on substance and purpose. To seek common grounds and maximise them, and to reduce differences and to minimise them. To elucidate benefits and advantages of Islamic finance based on practical efficiency and common sense with the emphasis of moral obligation to protect the society and world natural resources. In general there has always been a challenge for an economic system based on moral inclination to persuade the general public to participate in the system, because human generally including Muslims are attracted to material and physical rewards. Therefore the success of a moral economy cannot be measured through the same instruments or methodologies of material economy.

QUESTION 3: 

Islamic finance requires greater linkages or connectivity in integrating it with global economy. One of the key enabler in facilitating the integration is the harmonisation of Islamic finance standards. In your opinion, is dis-harmonisation of standards still impeding the growth of the industry?

Answer:

This is an old-aged question as the result of globalisation and financial industries going international (to make more money) together with the so-called cross border transactions. Efforts have been made by many parties whether government or industries to calibrate and fine tune their differences in many aspects of government and businesses. In situation of economic equilibrium among states dis-harmonisation of standards could post as an impediment or difficulty to economy growth. But given the fact of economic disparities among states currently, financial and banking standards normally benefit rich and developed nations.