Kuala Lumpur: Funding gaps for socially impactful goals or projects can be addressed from the Islamic finance sector, with support of a strong information architecture, experts say at the final session of Day 1 of the Global Islamic Finance Forum 2022.

In the panel discussion titled, The pathway to mobilising Islamic Social Finance: Zakat, Sadaqah & Waqf, panellists from the education and regulator space point out the need for improved research to understand the potential of Islamic finance, particularly in either meeting the UN Sustainable Development Goals (SDGs) or objectives of socially responsible investments.

Sharifatul Hanizah, Executive Director of Islamic Capital Market Development, Securities Commission Malaysia said the pandemic had caused the progress of meeting SDGs to stagnate, and research show in the post-pandemic era, funding gaps (for these goals) would rise to about 70% or US$4.2 trillion a year.

“What is good about it is that Islamic social financing has the capacity to mobilise funds to meet this (gaps),” she said.

Speaking solely on Waqf financing, Sharifatul said financing for SDG related investments could be brought through the Islamic finance markets in the form of waqf shares or funds, or a range of blended financing.

“Estimates that waqf assets in the world range from US$100 bil to US$1 tril, which makes it a potential source, but I think it’s important to realise that there is a wide gap in that range,” she said, adding that present information is hampered by an absence of a comprehensive information architecture or lack of data.

Prof Datin Dr. Rusni Hassan, Dean, IIUM Institute of Islamic Banking and Finance & AIBIM, Shariah Advisory Committee called for a more accessible approach for students or researchers to access financial data from the industry. 

That in turn would assist in targeted and relevant research for industry players.

In Dr Rusni’s presentation, she highlighted the need to increase research in Islamic finance, already built on socially meaningful values, important to improve the quality of life, social equity and fair-trade relations.

From 1990 to 2020, nearly 530 research projects have been done on waqf, while during 2009 to 2020, only 31 publications were on zakat.   She called for better linkages to the industry, either through scholarships or relevant research topics beneficial to financial players.

Meanwhile, Dato’ Mohd Redza Shah, Chairman, Association of Seniors in Islamic Finance said Islamic banking already have ideal instruments for social finance, some far superior to religious authorities.

“Islamic financial institutions have the right governance structure, in terms of audit and compliance and risk assessments,” he said.

Redza added Islamic finance institutions already have wide and existing networks and the right capacity for social finance investments.

Dr. Muhd Ramadhan Fitri Ellias, Head of Strategy, Maybank Islamic noted it was time for Islamic social financing to be part of the mainstream activities of an Islamic bank.

He calls for action-oriented leadership to set the culture and direction and improved engagement with customers who were keen to be part of noble causes through their deposits.

“Collaboration is also key to ensuring a success of meaningful projects, where we can help (local businesses) better distribute products as well as work with universities or trading partners and subject matter experts,” he added.

The panel discussion was moderated by Daud Vicary, Managing Director, DVA Consulting Sdn Bhd.

-Ends-

About AIBIM

The Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) was established in 1995. Currently, AIBIM has 28 member banks and the association:

  • Promotes sound Islamic banking system and practices in Malaysia.
  • Represents the interest of members locally and abroad.
  • Provides advice and assistance to members pertinent to the development of Islamic banking and finance at a local, regional, and global level.
  • Coordinates human capital development initiatives.
  • Promotes public awareness on Islamic Finance.

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