TAN SRI DR. WAN MOHD ZAHID BIN MOHD NOORDIN
CHAIRMAN, WIEF EDUCATION TRUST & CHAIRMAN, BOARD OF ADVISORS, HIGHER EDUCATION LEADERSHIP ACADEMY
WORKSHOP ON FINANCIAL INCLUSION:
CASE STUDY ON ISLAMIC MICROFINANCE
(24 July 2017, Intercontinental Hotel, Phnom Penh, Cambodia)
HONOURABLE SPEAKERS, DISTINGUISHED GUESTS,
LADIES AND GENTLEMEN.
WELCOME TO THE WORKSHOP ON FINANCIAL INCLUSION ORGANISED BY THE WORLD ISLAMIC ECONOMIC FOUNDATION OR WIEF. THIS IS PART OF OUR ROADMAP TOWARDS THE WIEF FORUM WHICH IS HAPPENING IN NOVEMBER IN KUCHING, MALAYSIA.
I AM TRULY EXCITED WITH THE THEME FOR TODAY’S WORKSHOP THAT TOUCHES THE LIFE OF MILLIONS NOT ONLY IN THE REGION BUT ALSO GLOBALLY – EXPLORING THE IMPACT OF ISLAMIC MICROFINANCE.
OUTLOOK ON ISLAMIC FINANCE
OVER THE PAST FEW DECADES, ISLAMIC FINANCE HAS SHOWN PROMISING GROWTH AND IS CONSIDERED AS ONE OF THE FASTEST GROWING SECTORS IN THE GLOBAL FINANCIAL SYSTEM. THE INDUSTRY HAS GROWN RAPIDLY AND BECOMING A COMPETITIVE ALTERNATIVE TO CONVENTIONAL AND TRADITIONAL FINANCING.
ACCORDING TO ERNST & YOUNG’S WORLD ISLAMIC BANKING COMPETITIVENESS REPORT 2013-14: THE TRANSITION BEGINS, IT IS ESTIMATED THAT GLOBAL ISLAMIC FINANCE ASSETS WILL TOP USD3.4 TRILLION BY 2018.
WITH SUCH HUGE ASSETS AS WELL AS THE BROAD SUBSCRIBER BASE – SERVING AN APPROXIMATE 38 MILLION CUSTOMERS GLOBALLY, THERE IS MUCH POTENTIALS IN ISLAMIC FINANCE ESPECIALLY THAT IT IS GETTING TRACTION AMONGST THE NON-MUSLIM REGIONS AS WELL AS THE CONVENTIONAL FINANCIAL INSTITUTIONS.
CASE IN POINT, CONVENTIONAL BANKING GROUPS SUCH AS HSBC, CITIGROUP AND STANDARD CHARTERED AMONG OTHERS HAVE ALREADY SET-UP THEIR VERY OWN WINDOW FOR ISLAMIC FINANCE, OFFERING ISLAMIC FINANCIAL SERVICES AND PRODUCTS.
OTHER NON-MAJORITY MUSLIM REGIONS HAVE ALSO SHOWN INTEREST IN PUTTING TO PLACE THE ISLAMIC FINANCIAL SYSTEM SUCH AS RUSSIA, GERMANY, CANADA JUST TO NAME A FEW.
A REPORT FROM THE MALAYSIA INTERNATIONAL ISLAMIC FINANCE CENTRE STATED THAT ISLAMIC FINANCE PROMOTES REAL ECONOMIC DEVELOPMENT – AND I ECHO THIS SENTIMENT FULLY.
ISLAMIC FINANCE IS THE SOCIO-ECONOMIC TOOL THAT COULD HELP IMPROVE FINANCIAL ACCESS AND FOSTER THE INCLUSION AMONGST THE UNDERSERVED QUARTERS TO ACHIEVE THE REAL ECONOMIC GROWTH.
FINANCIAL INCLUSION IS PARAMOUNT IN PROMOTING ECONOMIC SUSTAINABILITY.
EMBRACING ISLAMIC (MICRO)FINANCE WITHIN ASEAN
I BELIEVE THAT IT IS ONLY FAIR TO LOOK AT OUR OWN BACKYARD IN ASSESSING THE POTENTIAL AND PERFORMANCE OF ISLAMIC FINANCE ESPECIALLY ISLAMIC MICROFINANCE IN PUSHING FOR FINANCIAL INCLUSION.
ASEAN IS POISED TO BE THE NEXT LEADER FOR ISLAMIC FINANCE IN WHICH THE GULF COOPERATION COUNCIL COUNTRIES ARE CURRENTLY LEADING. ASEAN IS HOME TO MORE THAN 60% OF THE WORLD’S MUSLIM POPULATION.
ASEAN WOULD RANK AS THE WORLD’S SEVENTH LARGEST ECONOMY, WHERE THE REGION’S GDP IS EXPECTED TO REACH USD3 TRILLION IN 2017, WITH A GOOD MIX OF ECONOMIES THAT VARIES IN TERMS OF SIZE, STAGES OF DEVELOPMENT AND ECONOMIC STRUCTURE.
ASEAN NOT ONLY HAS THE DEMOGRAPHICS AND GROWTH POTENTIAL FOR ISLAMIC FINANCE TO PROSPER BUT ALSO BACKED WITH STRONG POLITICAL SUPPORTS FROM THE VARIOUS GOVERNMENTS, LARGE INVESTOR BASE AND GENEROUS TAX INCENTIVE PROGRAMMES TO BOOST FINANCIAL INCLUSION VIA ISLAMIC MICROFINANCE.
WITH SUCH POTENTIAL, WE AT WIEF BELIEVE THAT IN THE TIME OF DISRUPTIVE CHANGE WHERE INNOVATION FOR ISLAMIC FINANCIAL SERVICES AND PRODUCTS ARE AT ITS PRIME, WE SHOULD NOT MISS THIS WINDOW.
WE SHOULD TAKE ADVANTAGE OF THIS WORKSHOP TO BETTER UNDERSTAND THE IMPACT OF FINANCIAL INCLUSION IN ASEAN AND HOW WE CAN COME TOGETHER TO PUSH FOR POSITIVE RECEPTION AND PRACTICE IN THE REGION FOR ISLAMIC MICROFINANCE.
THIS SHOULD NOT ONLY BE A PLATFORM FOR DISCUSSION BUT TO MAKE ACTUAL CHANGE AND VISIBLE ACTION.
OPPORTUNITY FOR MULTILATERAL COOPERATION
UNDOUBTEDLY, THE GROWTH OF ISLAMIC MICROFINANCE HAS BEEN SUPPORTED BY THE STRONG, CONTINUOUS AND CONCERTED EFFORTS AND ROLES PLAYED BY THE GLOBAL AND REGIONAL MULTILATERAL ENTITIES.
THEIR ACTIVE ROLES HAVE SIGNIFICANT IMPACT TO ISLAMIC MICROFINANCE INDUSTRY GIVEN THEIR FINANCIAL CAPACITY AND HUMAN CAPITAL CAPABILITY.
THERE ARE OPPORTUNITIES FOR INTER-STATE LEARNING AND SHARING TO ESTABLISH BETTER ISLAMIC MICROFINANCE SYSTEM TO PROMOTE FINANCIAL INCLUSION.
THESE LEARNINGS CAN HELP THE NEW ADOPTERS TO MOVE FASTER, AVOID EXPENSIVE PITFALLS AND ADOPT BEST PRACTICES.
GLOBAL AND REGIONAL BEST PRACTICES AND STANDARDS CAN BE ADOPTED AND ADAPTED TO LOCAL CIRCUMSTANCES TO FIT THE NEEDS OF THE LOCAL QUARTERS.
CAMBODIA
LET US LOOK AT CAMBODIA AS A CASE STUDY ON THE IMPACT OF ISLAMIC MICROFINANCE IN PROMOTING FINANCIAL INCLUSION.
CAMBODIA HAS A SIZEABLE MUSLIM MINORITY WHICH STANDS AT 2% OR AROUND 350,000 OF ITS POPULATION AND THEY ARE LOOKING AT ADOPTING ISLAMIC FINANCE ACROSS ITS MICROFINANCE INITIATIVES AS AN ALTERNATIVE TO CONVENTIONAL MICROCREDITS.
WE AT WIEF ARE PROUD TO SAY THAT THE IDEA WAS DISCUSSED AT A ROUNDTABLE SESSION HELD IN 2015 AHEAD OF THE 11TH WIEF FORUM.
IF WE ZOOM INTO MICROFINANCE IN CAMBODIA, IT HAS EXPERIENCED RAPID GROWTH WITH TOTAL LOAN PORTFOLIO STANDING AT ALMOST USD440 MILLION WHILE DEPOSITS WERE MORE THAN USD490 MILLION, AS AT 2009.
WHEN WE TALK ABOUT MICROFINANCE AND FINANCIAL INCLUSION, IT HAS TO FIRST, SERVE ITS PURPOSE OF HELPING THE POOR AND UNDERSERVED – BUT IT WAS A BIT OF A STRECTH FOR CAMBODIA.
ACCORDING TO THE KHMER TIMES IN 2015, MICROFINANCE INSTITUTIONS IN CAMBODIA WERE CHARGING RATES AS HIGH AS 30% PER YEAR AND MANY OF THE SUBSCRIBERS WERE STRUNGGLING TO PAY OFF THE LOANS.
THIS IS AN OPPORTUNITY FOR ISLAMIC MICROFINANCE TO CLOSE THE GAPS AND PROMOTE BETTER FINANCIAL INCLUSION.
ISLAMIC MICROFINANCE SERVES THE TWO RAPIDLY GROWING INDUSTRIES: MICROFINANCE AND ISLAMIC FINANCE.
IT HAS THE POTENTIAL TO SATISFY THE DEMAND OF THE MASSES AS WELL AS COMBINING THE ISLAMIC SOCIAL PRINCIPLE OF CARING FOR THE LESS FORTUNATE IN PROVIDING THEM BETTER FINANCIAL ACCESS AND OPTION.
AS THE MAIN AIM OF THE MICROFINANCE INDUSTRY IS TO ALLEVIATE POVERTY AND EASE THE BORROWING OF THE POOR, ISLAMIC MICROFINANCE IS A BRANCH OF THAT WITH ISLAMIC FINANCIAL PRINCIPLES.
IN THIS CASE, ISLAMIC MICROFINANCE CAN OFFER BETTER FINANCIAL OPTIONS TO THE POOR COMMUNITY AFFECTED IN CAMBODIA TO ENSURE THEIR LIVABILITY AND FINANCIAL SURVIVAL.
WIEF FORUM
TODAY’S RPOGRAMME WILL GIVE YOU A TASTE OF THE WIEF FORUM WHICH IS TAKING PLACE FROM NOVEMBER 21 – 23, IN BORNEO CONVENTION CENTRE KUCHING, SARAWAK. THE THEME OF 2017 WIEF FORUM IS “DISRUPTIVE CHANGE – IMPACT AND CHALLENGES”.
THE 13TH WIEF CREATES PLATFORM TO DISCUSS BURNING ISSUES, FIND SOLUTIONS, DISCOVER OPPORTUNITIES AND DEVELOP INTITIATIVES THAT CAN BETTER PREPARE US FOR THE TECHNOLOGICAL REVOLUTION THAT IS GOING TO CHANGE OUR LIVES IN THE 21ST CENTURY.
PLEASE VISIT WIEF WEBSITE FOR FURTHER INFORMATION ABOUT THE FORUM.
WITH THAT, I WISH YOU ALL A PRODUCTIVE WORKSHOP.
THANK YOU.