Islamic banking shines

Malaysia proves its worth as a global model for a modern and dynamic industry MALAYSIA has succeeded in developing a vibrant and modern Islamic banking and financial industry over the last three decades. The Islamic Banking Act, which came into force in 1983, had paved the way for the nation to develop a vibrant and modern Islamic banking and financial industry. Initially, the industry served as an alternative channel for Muslims to perform banking and financial transactions in accordance with Islamic practices, and thus, avoid practices that have elements of oppression that are prohibited by Islam. As the industry has proven its viability, it is now accepted widely and used by all Malaysians. Apparently, Malaysia has received much recognition in recent years from the global banking and finance fraternity in its effort to develop a viable Islamic banking and finance industry. The country’s Islamic banking and financial industry has always been regarded as a global model for a modern and dynamic industry. Notably, among the achievements the country has achieved in the last three decades are in terms of growth in Islamic banks and financial institution assets, the increased market share of products and services to the total banking and financial system, formulation of legal frameworks and various standards, development of infrastructure and institutional capacity, education and training facilities, and many others. On the international Islamic banking and financial front, Malaysia also dominates the global market for sukuk, and in fact, the country was the first in the world that issued first sovereign sukuk in 2002. Currently, Malaysia’s sukuk issuance accounted for almost three-quarters of total global sukuk issuance. Malaysia is also home to the Islamic Financial Services Board (IFSB), an international standard-setting body. In addition, Malaysia is a renowned destination for the inter­national community in learning and gaining the knowledge and expertise on Islamic banking and finance. This success story reflects the relentless and concerted efforts of the Government and monetary and financial authorities in Malaysia, in particular Bank Negara Malaysia and the Securities Commission. This success list is by no means exhaustive and will continue to grow in line with the expanding global and domestic banking and financial environment. Notwithstanding, one of the many contributions from the growing success of Islamic banking and financial industry in Malaysia that warrants to be highlighted is the recognition given to the graduates of Islamic-based tertiary qualifications. Before the establishment of the first Islamic Bank in Malaysia some 30 years ago, graduates with Islamic-based qualifications, such as studies in Islamic jurisprudence or syariah, fiqh, fiqh Muamalat or other branches of studies that are related to Islam, may find difficulty getting a job in the mainstream economy. Their contribution was restricted to fundamental religious matters, and their job opportunities were very limited. There were perceptions that these graduates could only contribute by being ustaz (religious teacher), and work in a religious school or teach Islamic subjects in national schools. Some may work in religious depar­tments or become an imam in the mosque. Undoubtedly, these are noble professions; and they earn decent salaries for sustainable living. Due to this, if one chooses to study about religion, one may be considered as having no prospects, if we talk in terms of professionalism and monetary rewards coming with it. In this regard, it was obvious that 30 years ago, we could hardly find a person with syariah or fiqh background working in a bank. This perception has been transformed in recent years amidst the rapid growth of Islamic banking and financial industry in Malaysia and also globally. The growth of the industry has created an increasing demand for graduates with Islamic-based qualification to work in the mainstream industry of the economy. Syariah-qualified persons are greatly needed because Islamic banks and financial institutions must adhere strictly to comply with syariah rulings, which are guided by the establishment of various syariah compliance frameworks to guide the institutions’ activities. The Employment Outlook and Salary Guide 2012/2013 published by Kelly Services had reported that the current salary of syariah professionals in Islamic banking and financial institution is very competitive and on par with other professionals. Based on the report, the head of syariah in banking and financial industry currently earns a minimum salary of RM8,000 and a maximum of RM20,000 per month. At this salary scale, the syariah professional’s salary is on par with other professionals, for example, in the area of information and communication technology (ICT), accounting and finance, administration, marketing, investment and other professionals in other industries with the same number of years in experience (five to 10 years) and qualification levels (basic degree or Masters). Compared within the banking and financial industry itself, the salary scale is on the higher bracket of middle management. The report asserted that as Malaysia has become a key Islamic banking and financial hub of Asia, the need for specialised talent in this sector has intensified, with strong emphasis placed on four core sectors in Islamic finance, i.e. Islamic banking, Takaful, Islamic capital market and Islamic money market. The Islamic banking and financial industry in Malaysia has not only grown in size and infrastructure, it has also enabled the industry to recognise the value of Islamic-based qualifications, and elevate the status of Islamic-based qualifications in the mainstream economy. Based on employment and salary trends, it seems that the syariah profession may one day become a profession of choice that will attract many young and talented Muslims, similar to what previous Muslim generations used to aspire, in becoming doctors, engineers, accountants, or lawyers. Indeed, this aspiration is very much needed, in order to support further expansion of the Islamic banking and financial industry in Malaysia. > Mohamad Azhar Hashim is Fellow at the Centre for Economics and Social Studies, IKIM (source: The Star March 12, 2014)