According to Maszlee, high-quality education is a prerequisite to ensure continuous growth and development in IF
by NG MIN SHEN/ pic by MUHD AMIN NAHARUL
FROM its establishment in 1983 until today, Islamic finance (IF) has become a mainstream proponent of the Malaysian financial system, with 16 Islamic banks and 15 takaful operators now present in the market.
IF is known both at home and abroad for its ethical stance and emphasis on good values rather than focusing purely on making profits.
“Given its principles and philosophical underpinning, IF naturally has the potential to take the lead and strive towards an ethical, moral and also sustainable model for finance,” Education Minister Dr Maszlee Malik (picture) said in a recent lecture note at Durham University in Durham, UK.
While much has been done to boost the industry at home, the need for education to play a role in supporting the growth of IF is more urgent now than ever. Islamic moral economy, being the bedrock of IF, should rightfully contribute to socio-economic growth through human-centred and sustainable development.
Education Supports Growth of IF
According to Maszlee, there is substantial room for growth in IF. However, more support is needed — not only from the industry, but also from all stakeholders, particularly institutions that provide education and conduct research and development in the area.
“I firmly believe that high-quality education is a prerequisite to ensure continuous growth and development in IF,” he stated.
President of the International Council of IF Educators Dr Syed Musa Alhabshi said the establishment of the Malaysian Qualifications Agency (MQA) and the Finance Accreditation Agency (FAA) are examples of accomplishments in developing academic and professional industry competency frameworks for IF expertise.
Meanwhile, continuous academia industry engagements in research, training and consulting through agencies such as the Association of Islamic Banking Institutions Malaysia, the Securities Industry Development Corp and the Association of Shariah Advisors in IF help propel the growth of IF expertise.
Prof Dr Mohamad Akram Laldin, ED of the International Shariah Research Academy for IF, added that the establishment of IF education institutions and programmes in Malaysia has produced local graduates who are now serving in various capacities worldwide.
“So, Malaysia does not only provide human capital in IF for our domestic market, but for the international market as well,” he said.
Integrating Education and IF
Despite the cumulative investments in building the sustainability and resilience of the industry, there are several gaps that must be filled in, particularly in integrating education and training, and streamlining the standards between academic and training programmes, Maszlee said.
One challenge lies in integrating the applied or practical aspect into the existing education system. Under the current system, there are many requirements for students — for example, undergraduate students have to complete more than 100 credit hours, Mohamad Akram said.
“Another challenge is the capability of lecturers. They’re trained as academicians, so their exposure is very much on the theoretical aspect. We need more academicians to understand what is happening on the ground. With that, we will be able to move our IF education to the next level,” he added.
For Syed Musa, the main challenges in integrating education and IF include the continuous need for integrating Shariah norms, values and principles in economics, law, finance, managerial functions and risk management.
“To enable and enhance Islamic social finance literacy among the financial community is also another main challenge,” he said.
Providing Solutions to Real World Challenges
While Malaysia maintains its position as a top provider of IF education and research, the industry as part of a larger system “must be able to provide solutions to today’s unprecedented challenges such as inequality and global warming”, Maszlee said.
To that end, the ethics of IF can serve as a foundation for these solutions, as IF ethical solutions are primarily motivated by Shariah goals which establish the need to protect and nurture religious belief, life, intellect, posterity and wealth.
Prof Dr Mansor Ibrahim, deputy president academic of the International Centre for Education in IF, said IF education must not be confined to certain components only.
Entrepreneurship, leadership, strategic management and innovation are required in all organisations, whether profit-oriented or not. Unfortunately, they are not given much emphasis in IF education, especially at the postgraduate level,” he said.
Mansor also said that IF shares many values with the sustainability agenda that’s increasingly taking over the global stage.
Malaysia is a global leader in sukuk issuances, whereby sukuk is often equated with socially responsible investing — a strategy which aims to balance the social and environmental outcomes with that of financial returns.
Islamic stock indices also typically exclude “sin stocks” — those which are not Shariah-compliant such as tobacco and gambling companies.
“In promoting and supporting a global ethical and sustainable ecosystem and environment, Islamic financial services are engaged in ethical services and activities avoiding usury, gambling and any activity that is adverse and destructive to humanity, society and the environment,” Syed Musa added.