Raja Teh: The West could learn a lot from the principles of Islamic financial practice

Malaysia boasts women in chief executive posts; the target for women in the workforce is set at 55%

The recent banking crisis in the West has thrust Islamic finance into the limelight as we seek alternative models that will be robust in the face of further credit onslaughts. Much has been written about how Islamic banks withstood the financial assault when compared to their conventional counterparts. If that is true, shouldn’t the world embrace the principles of Islamic finance? Wouldn’t it make the world a safer and better place?

Without trying to oversimplify the issues surrounding the 2008 financial crisis, I would say that had the world adopted the wisdom and philosophy of sharia (Islamic laws) governing finance, which promotes equity and justice, it is unlikely we would be experiencing same troubles today. Islamic finance disallows interest-based activities, gambling and speculation. Financing (or lending in the conventional term) is allowed only to fund real economic activity. An example would be the trading of derivatives. While Islamic finance recognises the use of derivates for hedging purposes (capital preservation/risk mitigation), it disallows naked trades of those instruments, as that is deemed a speculative act. Had we all known how the 2008 crisis would start, we would have been able to appreciate the wisdom guiding Islamic banks in such dealings. It is interesting to note that estimates have placed the face value of all derivatives at more than 14 times the entire world’s annual GDP.

As a proponent of the industry, I hope that we will be able to showcase at this week’s World Islamic Economic Forum in London, the importance and relevance of Islamic finance in enhancing trade, cutting across borders, race and religious beliefs. According to an Ernst & Young report, 10 of the world’s 25 fastest growing markets are in Muslim majority countries. The use of Islamic financial tools can only boost trade between the Muslim and non-Muslim world. To date, global Islamic finance assets stand at $1.2trn and are expected to reach $2.6trn by 2017, according to PwC.

Malaysia has proved that Islamic finance can flourish alongside conventional financial markets. The sukuk (Islamic bond) market was key in the development of Malaysia’s infrastructure and economy over the past two decades, constituting more than 65 per cent of its private debt securities. Islamic banking assets now make up 24.1 per cent of Malaysia’s total banking system, double the amount a decade ago. The systems work in parallel.

London is no stranger to Islamic finance. The UK is Europe’s premier centre for Islamic finance, with $19bn (£12bn) of reported assets. It has the highest number of Islamic financial institutions in a Western country and has undertaken reformation of its tax laws to facilitate Islamic finance. And it can play a role in promoting the use of Islamic finance worldwide. In addition, opportunities in terms of employment in the industry are also plentiful. And they are gender neutral.

A few years ago a journalist came to Kuala Lumpur from New York to do a story on Islamic finance: she ended up writing a piece on women who were serving in senior positions in the Islamic financial industry in Malaysia instead. It was a revelation to many.

The Malaysian Central Bank governor is a woman (who has been accorded “Grade A” among the heads of central banks for the 10th time by Global Finance magazine) and is the country’s foremost supporter of Islamic finance. The former head of the Securities Commission is a woman, who also is strong advocate of the industry. Malaysia also boasts female sharia scholars (a rarity, if not unique). Engku Rabiah Adawiah Engku Ali is a professor of law at International Islamic University Malaysia, who has inspired a whole generation of female sharia scholars. And Malaysia also boasts women in chief executive posts at Islamic banks.

The development of the role of women in the workforce sits high on the government’s agenda. Under the 10th Malaysia Plan, a target to raise women’s participation in the workforce has been set at 55 per cent.This may seem surprising to many who often view Islamic countries as not being supportive of female emancipation, a view which is not entirely baseless.

Malaysian women are fortunate that gender diversity and inclusion is embraced enthusiastically in the country (perhaps too enthusiastically, quipped the elders, as the proportion of female students entering public universities hit 65 per cent).

This bodes well for the development of the Islamic finance industry, as it is often said that diversity is a key driver of innovation and a critical component of globalisation. I hope Malaysia’s story will inspire others to promote the development of the industry for the greater good.

Raja Teh is chief executive of Malaysia’s Hong Leong Islamic Bank. She will be speaking at the World Islamic Economic Forum in London, 29 to 31 October www.9thwief.org

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
PROMOTED VIDEO
News
Performers dressed as Tunnocks chocolate teacakes, a renowned Scottish confectionary, perform during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
Sport
Arsenal signing Calum Chambers
sportGunners complete £16m transfer of Southampton youngster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Java Developer - Banking - London - Up to £560/day

£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

HR Business Analyst, Bristol, £350-400pd

£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

Account Manager - (Product & Account Management, Marketing)

£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

Day In a Page

The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on