The re-emergence of Islamic economics and finance has driven economists and scholars to advance a wide-ranging theoretical structure of Islamic finance. Experts have been calling for more than three decades to innovate virtuous and lawful financial products and instruments. Thanks to some scholars who have the courage to embrace purely Islamic financial products, yet there are a few who have ended up with the duplication of conventional products. It is a wake-up call for a post-mortem on what had happened along the process and to realign to the novel objective.
To Muslims, departing from the foundations of Islamic law could render the activities conducted under its name religiously intolerable. Looking at what is happenning today, perhaps it is not unfair to conclude that most of Islamic debt-based financial products is far from realising the moral obligations and reasonable distribution of wealth, unless Islamic banking is brought out from the conventional regime. Proper realisation of Islamic banking and finance would require embracing the comprehension of Islamic legal and moral agendas.
In such a situation, financial inclusion for many Muslims is not the best answer to uplift social welfare, promote economic sustainability or normalise inequality. The Quran has underscored the Islamic stance towards interest as follows, 'That is because they say: 'Trade is like usury,' but Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (the offence) are companions of the Fire: They will abide therein (forever). (The Quran, 2: 275)
We need to move to the business or investment inclusion approach. Findings from broad studies conducted in developed and developing countries have shown that the relationship between equity ownership, economic and social progress is positively correlated. Increasing equity ownership brings more progress to the society. As a result, access to finance also will widen among the low and medium income groups while at the same time reduce poverty and narrow down the inequality gap.
By moving towards this aspiration, the government's stance concerning The National Transformation Policy (2011-2020) will be able to re-engineer economic growth for greater prosperity and maintain the people-centric economic model that is inclusive and sustainable. The proposed business inclusiveness approach provides a crucial platform to ensure the five-year Eleventh Plan transits to an advanced economy and inclusive nation by the year 2020. Towards this end, all developments mobilising the new shift will enrich the lives of the people and enable them to partake in the country's economic prosperity.
Some living proofs in Malaysia is the establishment of business and investment institutions such as Permodalan Nasional Berhad (PNB), Tabung Haji (TH), Kumpulan Wang Simpanan Pekerja (KWSP), Felda Global Ventures Holdings Berhad (FGV) and a few others which have been great successes. These institutions managed to expand equity ownership among members and subscribers be they financial or business illiterates or otherwise. The main reason for their success is that the companies are managed by those who are sound experts. In the same vein, the commodity-based companies such as the Malaysian Rubber Board, Malaysian Palm Oil Board, or industrial-based institution like the fishery bodies etc. may need to be empowered strategically.
Indeed, one or more of the abovementioned successful institutions remain steadfast in defending the country's financial strength and have been able to fund selected projects. According to Malaysia's largest fund-manager, PNB, the Group Chairman has set a target to increase its total assets under management to about RM350billion by 2022 from about RM259.49bil currently. Recently, Tabung Haji has purchased 1.75million additional shares to hold 5.09 per cent of DRB-Hicom Bhd total shareholding or 98.32million shares. As unit or account holders, they are able to take part in providing fund in the industry as well and share the cake.
Encouragement of public shareholding in the corporate sector, re-alignment of government statutory bodies to its main function and assimilating business literacy among people, among others, need the boost of experts, economists and scholars, as much more efforts is needed to push our nation to the next level.
Bringing people to the business inclusion model will enhance the economic growth and tackle poverty and inequality. The next step is for the policy-makers to jump start new business ventures which would set up the arena. We should also not overlook the need to strengthen the governance aspect covering mismanagement issues, corruption and unnecessary political influences. In practising the spirit of the Quran by encouranging trade, we will be blessed by crafting departure away from prohibited activities of riba' (ursury).