FOOD FOR THOUGHTS....

I was reading this article - Practical legal issues in Islamic banking, written by a learned law practitioner with regards to the Islamic banking environment in Malaysia.

In summary, the author listed down issues faced by Islamic banking in Malaysia :

1) Insufficient legal protection

2) Jurisdiction – whether Shariah Vs Civil Court

3) Difficulties in turning concepts into practice

4) Assets to be used as underlying assets – must be owned by customer, free from encumbrances

5) Security to be offered must be Shariah compliant

6) Transaction cost

7) Additional documents and clauses

8) Lack of expertise

The article was written and published in April 2008 and now is mid March 2009 – about a year later and let us compare how far has the situation changes :

a) Items 1, 2, 3, 4, 5, 6, 7, 8

These issues still persist – a good example is the controversial ruling on BBA by the High Court late last year.

It is very sad to note that despite a lot of “hue and cry” from the banking industry, practically nothing has changed ever since.

Will we need to wait for the next millennium to change? Think about it.....

MAIN CONCLUSION - ALLAH KNOWS BEST

Well, I was reading a few articles on finance and found how ironic that these people (mainly westerners) who championed free trade and free market (and pure capitalist) are moving towards Islamic banking as an alternative, not because of what it represents but because it serves as a temporary solution until their “mess” have been cleared.

I guess they would revert to conventional banking again once the economy has return to normal. I guess some people will never change.

I was quite taken by a remark made by a learned professor last week - regarding Shariah. Everyone who is anyone is talking and giving opinions about Shariah – but do they really know what they are talking about? A good example is when an NGO talked about the need to revamp the faraid system as it is not fair to the women. Personally, I am a woman and I know for a fact that we mortals cannot change what has been specified in the Holy Quran. Everything that has been put forward to us has its own reason and whatever the reason may be, sometimes things are just beyond our human capability to comprehend and understand – only Allah knows best (wallahualam).

6TH IFSB SUMMIT IN SINGAPORE

Eight central bank governors have confirmed their participation in the 6th Islamic Financial Services Board Summit (IFSB) from May 5-8 in Singapore.

The governors are from Bahrain, Jordan, Korea, Malaysia, Qatar, Saudi Arabia, Singapore and the United Arab Emirates (UAE).

Themed, "The Future of Islamic Financial Services", the core aim of the summit is to highlight the role of the various stakeholders towards developing a robust future for the Islamic financial services industry (IFSI).

MALAYSIA : ISLAMIC BANKING IS RISING BUT IMPACT IS MINIMAL

Look at the statistics above, even though Islamic banking business is expected to remain on the uptrend, its contribution will have minimal impact on the total income of local banks.

While prospects were still good for Islamic banking in the country, it contributed only 10% to 11% on average to the total income of the country’s nine listed banks in the third quarter ended Sept 30, and 9% in the second quarter.

However, for the third quarter of 2008, Islamic banking income for these banks grew 3.7% versus the second quarter despite a 15.7% drop in the banks’ total income.

SHOCKING (BUT TRUE) STATISTICS TO THINK ABOUT.....

I was reading an article from The Forbes.com titled The Enforcers, and was shocked and bewildered to learn of the following statistics :

· Currently, there are only 20 men that act as the gatekeepers of the Islamic finance realm

· There are no more than 260 scholars worldwide that have the necessary knowledge in Islamic finance

Islam has overtaken Roman Catholicism to become the world's largest single religious denomination, the figures for 2006 showed that Catholics accounted for 17.4 % of the world population while Muslims accounted for 19.2 % (figures obtained from United Nations). The Vatican puts the number of Catholics in the world at 1.13 billion people, while the figure for Muslims is estimated at around 1.3 billion.

Look at the numbers – what it means is that there is 1 Islamic finance scholar for every 5 million population worldwide. What happened? What went wrong?

Islamic banking and finance is a very lucrative business and yet only 260 scholars are well versed in the field. Malaysia has done a very good job by coming up with INCEIF (International Centre for Education of Islamic Finance) – another brainchild of Bank Negara Malaysia They are producing CIFP graduates and their Master and Doctorate degrees in Islamic Finance are still in the infancy stage but they are making progress. What about the other Islamic nations?

Islam is the religion which was given to Adam, the first man and the first prophet of Allah, and it was the religion of all the prophets sent by Allah to mankind. The name of God's religion lslam was not decided upon by later generations of man. It was chosen by Allah Himself and clearly mentioned in His final revelation to man. In the final book of divine revelation, the Qur'aan, Allah states the following:

"This day have I perfected your religion for you, completed My favour upon you, and have chosen for you Islam as your religion". (Surah Al-Maa'idah 5:3)

"If anyone desires a religion other than Islam (submission to Allah (God) never will It be accepted of Him" (Surah Aal'imraan 3:85)

"Abraham was not a Jew nor Christian; but an upright Muslim." (Surah Aal'imraan 3:67)

Think about it – think really, really hard. If the Muslims don’t help ourselves, who else will do it for us?