Tun Musa Hitam, President of the World Islamic Economic Forum Foundation, comments on the build up to the forum, Islamic banking, and Kazakhstan’s significance in the Muslim world.
The seventh World Islamic Economic Forum (WIEF) was held in Astana, Kazakhstan in June 2011. Once again, it was a platform for discussions on SMEs, the empowerment of women, the encouragement of entrepreneurship among the youth, and an ever-increasing focus on Islamic banking. These days, it seems like everybody wants to become involved in Islamic banking. Every major city wants to be an Islamic banking center. London wants to be a center, as does Tokyo, Singapore, and Hong Kong. The Islamic banking and financial services industry, with participation from conventional players, is now competing to service the global community. And the urge has been so strong and spontaneous that no one has had to push hard for Islamic banking and finance to be accepted.
The whole world has been looking for a system to cope with problems related to the experiences gained from the recent financial crisis. Islamic banking, which embodies the universal principles of ethical finance and socially responsible investment, has built-in mechanisms to protect itself from extreme shocks. Because of aspects such as this one, the methodology of Islamic banking is fast becoming more acceptable, even beyond the shores of the Muslim world, with people increasingly buying into the idea of “finance with a moral compass” as the new name of the game.
Indeed, although it may be the answer to shock-resistant banking, a proper framework governing all aspects of the sector needs to be established immediately. There is, additionally, an urgent need for standardization of the product brand of the Islamic finance industry. In understanding rules and regulations and compliance, one cannot afford to be vague. This requires an appropriate regulatory framework and an infrastructure and architecture that promote Islamic capital markets. Islamic finance and banking must be put in place systematically, with the involvement of all stakeholders. Sure, there is profit to be made with Islamic finance, and Islamic bankers are no angels in disguise. However, they are still imbued with a discipline that is less averse to risks, they conduct more due diligence, and they are more wary. In other words, they practice safe banking.
The time is right for this. We see positive trends prevailing for the development of Islamic banking. In some countries, growth is as much as 10%-15% annually. This is indeed most encouraging, and deserves full government support within the Organization of the Islamic Conference (OIC) countries. Malaysia has spent 30 years developing Islamic finance to successfully function in parallel with the conventional banking system. It is clear that Islamic finance can co-exist and thrive alongside the conventional banking system, and it should be promoted much more with unity of purpose and consensus.
In the six previous forums we have gone beyond talk, and tried to make sense of the dialogue and come out with defined areas for action. Throughout the year, and before the forum in Astana, the WIEF conducted roundtable discussions on the future of Islamic finance and the halal market in Bahrain and Turkey, bringing together international bankers in conventional and Islamic finance sectors, budding and established entrepreneurs, and halal industry practitioners to talk about furthering practical applications of sharia-compliant financing schemes and harmonizing the halal market to consolidate the strengths of the different economies of the Muslim World. Furthermore, in preparation for the forum in Astana, the WIEF Businesswomen Network (WBN) conducted its second workshop in January 2011, with 28 female entrepreneurs in attendance from 14 different countries. Furthermore, in February 2011 the WIEF Young Leaders Network (WYN) met with the Young Association of Muslim Professionals in Singapore and Malaysia for the first time. It was ideas from these forums that the discussions in Astana in June 2011 were based upon.
WIEF chose Kazakhstan because it really is an undiscovered gem. It has real potential to make positive change in the Islamic world. It is a country of 16 million people with enough arable land to feed half a billion. Its proven oil and gas reserves will make it the 10th largest producer by 2015, and it is also rich in minerals such as uranium. We were extremely pleased to host the forum in Astana, and bring the focus to Central Asia as Kazakhstan looks to provide both energy and food security to Central Asia and the Asia Pacific region.
While there is an important need for the governments of Islamic countries to involve themselves in the WIEF framework to seek business and economic solutions, it is the private sector as represented by the business people who are the most active players in the annual forums. These are the people who will be driving the aims and aspirations of the WIEF in the following years.
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