Saturday, Oct 21, 2017
Finance | Asia-Pacific | Malaysia

Islamic finance

Building bridges through common goals


2 years ago

Mr. Tan Sri Ahmad Fuzi Abdul Razak, Secretary General of the World Islamic Economic Forum Foundation
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Mr. Tan Sri Ahmad Fuzi Abdul Razak

Secretary General of the World Islamic Economic Forum Foundation

We speak with Tan Sri Ahmad Fuzi Abdul Razak the Secretary General of the World Islamic Economic Forum Foundation about Malaysia today and the challenges for Islamic economies around the globe.

What is the goal and challenge for AEC integration in 2015?

The AEC goal has been clearly defined at its inception. Countries in South East Asia need to integrate economically to remain competitive rather than going alone in an uncertain and challenging world. Other regions, especially Europe, have done so with proven success. Emulation of best practices would only bring benefits to all Member States of ASEAN in the long term. The main challenge of course is to bring into reality the essence and substance of the AEC by implementing the Programmes of Action fully within the time frame that have been duly agreed upon by all Members.

But ASEAN integration as a whole is not one dimensional. There is a need to strike a proper balance between the economic pillar and the other two equally important political-security and socio-cultural pillars of ASEAN. Political will include the right leadership to collectively move in the same direction, it is therefore crucial for the ultimate success of ASEAN integration and the credibility of the regional organisation.

Is it realistic for this objective of integration to be achieved in 2015?

Agreeing on a timeframe is important to achieve ASEAN's common objective. Such an approach should itself be a strong incentive for ASEAN Member States to strive for progress without being influenced by the movement of the slowest Member. Indeed the principle of consensus within ASEAN in this regard should be applied positively and with a sense of responsibility by all Member States. As I see it what is more important is not to expect everything to be perfect in 2015 but to look at ASEAN integration as a work in progress that requires continued commitment and dedication by all Member States to achieve the desired objective.

With different economies at different stages do you feel protectionism by individual nations will disrupt economic integration?

I agree that protectionism by individual ASEAN Members States can have a negative impact and disrupt the process of regional economic integration. Such States should rightfully look at the bigger picture and the overall interest of ASEAN. However, protectionism is not peculiar only to ASEAN as even developed countries resort to it in some form or other when it suits them. We also need to recognise that protectionism is important as a safeguard of national interest for some States to warrant their continued membership of the organisation. ASEAN after all is a voluntary organisation.

I believe the issue of the total elimination of protectionism within ASEAN Member States should be looked at as a long term proposition in line with the gradual narrowing of the gap between the more developed and still developing economies within ASEAN. This is not unachievable given the increased awareness within ASEAN of the importance of a successful organisation in bringing down production costs, improving competitiveness and efficiency, allowing for mobility and so on and so forth.

How do you feel the technology sector’s performance here in Malaysia?

I think the government fully recognised the importance of innovation and the development of technology in Malaysia as a matter of policy in moving towards achieving the status of a high income nation. The administrative structure, institutional instruments and regulatory framework are well placed under the relevant Agencies to promote the growth of technology in the country. The transfer of technology from other countries to Malaysia through mutually beneficial collaboration is also given a lot of priority by the government. In this regard the Malaysian Industry Government Group for High Technology (MIGHT) has done quite well since its establishment. I must say that in some areas like rubber and oil palm and the aerospace related business sector we have achieved a measure of success in terms of technological development.

Of course success in this sector for any country requires continued research and innovation and by allocating an adequate amount of financial resources for such purposes. The competing demands for resources can always be a major constraint for any government that needs to be addressed. Wastage and duplication of resources on research works should be avoided at all cost. I agree with the view that Malaysia should try to move away from low technology commodity business to high technology business in the economy. This means more importance should be given to developing Malaysia's high-technology strategy and niche areas that could best reflect Malaysia's leading role in the field of technology development.

There is a fascination with the Malaysian education system. It is hugely successful in producing top-quality people, so would you say that education has played a massive role in the development of Malaysia?

Definitely. Education is key to a country's development. Malaysian Leaders have been harping on the word education, education and education. No country can develop and grow without giving emphasis to education, so in Malaysia the largest portion of the budget is assigned to education. And more and more schools are being built throughout the country. The government provides almost free education from primary up to secondary school, with comparatively little fees imposed in public universities. The democratisation of education is an important feature of the country's educational system to promote social mobility without allowing education to be the monopoly of the rich.

I think the challenge faced by the government is to provide a unified integrated system of education in Malaysia. Whilst revision after revision is made to the educational system at various levels over the years, a national consensus should be pursued to develop an appropriate Educational Blueprint acceptable to all that would help promote national unity amongst the various ethnic groups in the country. My fear is that the current weaknesses in Malaysia's educational system would promote the principle of separate development of education enjoyed by different ethnic groups within the country to the ultimate detriment of the entire Malaysian community.

How has the UK embraced Islamic finance in your opinion and can it be the European hub for Islamic finance?

Our experience in London when organising the 9th WIEF in 2013 clearly demonstrated the UK's keen interest in embracing Islamic Finance and turning London into the European hub for Islamic Finance. I believe the UK government is being realistic and practical in seeing the various benefits to be derived from doing that given the excellent infrastructure and enabling legislations that exist in the country. The UK in this regard is way ahead of many other EU Member States and could very well take the lead in collaborating with other Muslim countries like Malaysia. The issuance of Sukuk by the UK in 2014 is indeed commendable. I believe however, the biggest challenge in promoting London as the hub is to get the average non-Muslims in the UK to embrace Islamic Finance in the retail sector by providing more facilities for the convenience of the people.

What are the challenges to the growth of Islamic banking? What do you see as the barriers for its growth?

Whilst the annual growth of Islamic Finance and Banking globally at 16.7% is most encouraging, challenges remain. We need to overcome the negative psychological perception pertaining to the word "Islamic" so as to make it more acceptable generally to non-Muslims. The name "Green Bank" has been suggested as an alternative without however gaining much traction. In Arab countries they don't use the word "Islamic" at all for Islamic Banks. Many countries too have yet to have a firm policy with enabling laws to establish Islamic Banks and this can be another challenge to overcome. Resistance towards Islamic Banking still exists within some countries due to prejudice and the lack of understanding. Added to all these is the challenge of providing training programmes to produce bankers competent in both Shariah laws and conventional banking to manage Islamic Banks.

The WIEF is happy to be able to play a complementary role in providing the platform for the understanding and promotion of the development of Islamic Finance and Banking through its annual Forums and the series of Roundtable held in various non-Muslim countries devoted to the subject. We are encouraged by the interest shown by countries like the UK, Russia, Spain, South Africa, Korea, Japan and China and hope to continue to pursue this noble initiative globally.

What is your current agenda regarding the World Islamic Economic Forum and the key goals that you are focusing on?

Our aim has always been to provide a platform and a global meeting place to discuss a wide array of economic and business related issues. We are happy that our tag line "Building Bridges Through Business" is now widely accepted and from the feedback received, businessmen of all shades and categories are benefiting from attending our annual Forum. Our strategy of being the "economic face" of the Muslim world has to a large extent been successful.

Creativity and innovation have always been our guiding principles in crafting the structure and content of our Annual Forum. For the 11th WIEF, special focus will be given to SMEs in line with our goal of creating new opportunities for small and medium size business players. We believe that they are the ones that needed most help as their success would bring far reaching benefits to a larger section of the business community.

To be graced by invited global Leaders, participants of the Forum this year will also be opened to a wide range of issues for discussions and networking opportunities under specially designed Clusters covering Islamic Finance, Halal, Technology, Sustainable Living, Women and Youth, Creative Arts and Education. And added to all these will be various platforms provided under Exhibitions, Mocafest, Special Programmes, Sponsors' Programmes and Meetings to cater to the diverse needs of discerning participants. Indeed there is something for every participant attending the Forum.

How do you help women to engage in business and support them?

The increased interest shown by women to engage in business is most encouraging and deserves the support of both the public and private sector. Education is again key in empowering women to go into business. It is interesting to see more females than males admitted into universities currently in Malaysia and this should augur well for women eventually to become corporate leaders and Board Members of public-listed companies. Directly helping business women by providing them easily accessible funding to do business should also be a major boost to them.

The WIEF is making its own contribution by organising special workshops for women interested to do business in the comfort of their home through online business. The idea is to enable them to open their own website and do business without having to do so in a shop and pay rent. They can receive orders online and conduct their business to earn additional income for the family whilst taking care of the family at home.

Within your organisation given that you are a transnational organisation, do you find that the opinions differ on the programs that you are trying to put forward? Like you said before, some countries are maybe not as moderate as Malaysia.

We believe in taking the middle line. Being moderate should be more acceptable as a general approach to doing things. Whatever is going on elsewhere, for the sake of stability, I think human beings need to live together in harmony. There will always be problems and conflicts in one part of the world or the other, many of which would not be easily overcome. In any case we don't see resolving such conflicts as our role at the WIEF. What we are trying to do is not to be involved in resolving political, security or religious issues but rather to promote the positive aspects of cooperation in our programmes which are open to all Muslims and non-Muslims.

What would you say are the opportunities for non-Muslims and how can they interact with you and benefit from the collaborations you promote?

The WIEF is always open to any form of mutually beneficial collaborations. Indeed we are already collaborating with many government and non-government agencies, international organisations, associations and corporations without regard to religion. Some of them are registered members of the WIEF Foundation. What is important is to tear down barriers, identify the basic objective of such collaboration and develop programmes that are doable and practical and that can bring benefits to the largest sector of the community especially the youth and women, irrespective of whether they are Muslims or non-Muslims.

Imagine that this is one of your round tables and you were to pick a topic that you would like to put forward for Muslims and non-Muslims to sit down and talk about. What would be the topic that interests you particularly at this time?

I think Muslims and non-Muslims need to be aware of their respective concerns, fears and aspirations as they strive to attain global peace, stability and prosperity. There should be appropriate dialogues on these issues so as to enable them to establish a strong foundation for business and economic collaboration in all fields. The WIEF is just one of the many global platforms that exist today against the enormity of the problems faced. We fully understand our own limitations. What is important perhaps is to get other platforms to focus on achieving a similar objective as the sum total of the activities undertaken together could add up to something really significant globally.

What about your own passions and what drove you to get involved with this organisation? You have dedicated your time and energy to this agenda.

I am just 66 this year, fairly young I must say when compared with our WIEF Chairman Tun Musa Hitam who is 81 in April! He is always young at heart and looks young too physically!

And so at my age, I believe it is still too early to fully retire!  In any case I myself do not believe in stopping work after retiring from government service. One should continue to work as long as one can, health permitting Inshaalah!

Secondly, I believe that for any organisation to perform well it is always good to combine the experience and wisdom of the seniors with the exuberance and dynamism of the young. And this is what is happening at the WIEF. We have a large number of young staff including women and we have literally democratised our decision-making process to ensure the best outcome in everything that we do. And this has made everybody happy!

Thirdly and more importantly perhaps, I see my involvement with the WIEF as my way of giving back to society through whatever little contribution that I could make in my present capacity as Secretary-General of the Foundation. The WIEF is already making an impact globally and I see a bright future for the Foundation and its works in the years ahead, given the right support from all the stakeholders.

You have obviously seen Malaysia developing rapidly. Where would you say the possibilities are for Malaysia? What do you think the next 3 years hold for Malaysia?

As a developing country Malaysia has certainly come a long way since independence in 1957. It has seen rapid economic development from being a producer and exporter of primary products like tin and rubber to manufacturing and the expansion of the services sector. The economic fundamentals and indicators remain positive with strong reserve, low inflation, continued investment inflow, high export, low unemployment, revenue growth outpacing public spending and oversubscribed government's global sukuk issuance. As has been said, the possibilities for Malaysia are limitless given the right leadership, political stability and wise economic management.

Even though 3 years is a relatively short period for any country, it is quite difficult to predict what could happen to Malaysia. But hopefully the consequential effects on the currency and budget deficit following the fall in the price of oil, the severe floods suffered recently and the airplane tragedy affecting MAS and Air Asia would spur the Leadership to think anew in terms of strategy and governance of the country's socio-economic Plans and Programmes for the long term benefit of the people.



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