Two Memorandums of Understanding (MoU) were signed today to raise awareness about Islamic banking in the Maldives and to institute a Hajj fund to enable would-be pilgrims to travel to Mecca.
The MoUs were signed between the Islamic ministry and Fine Line Holding of Malaysia. The objective of the first MoU is to “work towards assisting the Maldivian government in its vision of enlightening the Maldivians on the basic operational and functional capabilities…of the Islamic Banking and Finance system.”
The company will provide “seminars and education” with prominent scholars to “assist the people of Maldives to be more open to Islamic banking”.
The second MoU involves the development and implementation of a Maldives Pilgrims Management Fund to help Maldivians systematically save enough money to perform hajj “without any significant encumbrance”.
Responding to questions from journalists, Dr Abdul Majeed Abdul Bari said the ministry would conduct joint programmes to “raise awareness” on Shariah-based finance.
He added it was “very important” to have a capable foreign partner and train people to “regulate an effective and long lasting” Islamic bank in the Maldives.
Mohamed Shaheem Ali Saeed, state minister of Islamic affairs, said there were currently “no experts” in Islamic banking in the Maldives and as such training was essential to ensure qualified people.
“It’s not enough that they have an Islamic education, they should also have a background in economics,” he said. He added citizens needed to become aware of Islamic banking and the differences between Islamic banks and other banks.
“Right now, the most successful economic philosophy in non-Muslim countries is the Islamic economic philosophy. The reason is not by virtue of being Islamic but because of its benefits. That is why even Western countries have adopted it.”
The previous government had signed a MoU with the Noor bank of Dubai and the Islamic Development Bank, but the agreement did not come into fruition after Noor bank suffered in the economic downturn.
Bari said the MoU with Fine Line Holding to provide “financial consultation” was very important as the Maldives Monetary Authority (MMA) had previously expressed concern about the lack of a “regulatory body” to oversee activities.
Speaking to Minivan News today, governor of the MMA Fazeel Najeeb said: “We would welcome applications by genuine parties who have experience behind them.”
Shaheem said a letter was sent to the president two weeks ago to fast-track the process of establishing an Islamic bank in the Maldives. “The president has told the ministry the MMA is in talks with some Islamic banks.
“So in truth, the government has given a high priority to this. But there are some difficulties because of the global economic downturn, but God willing, we will not falter and we will make this a success.”
Islamic banking is a system of banking that is compatible with the principles of Shariah law, which proscribes riba (usury and interest) and investing in businesses which provide goods or services that are considered haram (forbidden in Islam).
Islamic banks are required to set up advisory committees or have consultants to offer advice and ensure the bank’s activities conform to Shariah principles.
There are a number of different financial transactions that take place, according to Dr Abdullah Shiham Hassan, advisor to the MMA on Islamic banking. One example is Musharakah (joint venture).
This involves joint investment in a project on the agreement that the net profit or loss will be shared – one of the basic principles of Islamic banking – according to a pre-agreed ratio.
On the potential risk of loss involved in such a relationship, Shiham said, “We leave it to god.”
Bari said a Hajj fund would be set up to allow people to “invest a very small amount” to make the pilgrimage, adding “the concept has been very successful” in Malaysia.
At present, Maldivians needed to raise “almost Rf100,000” to make the pilgrimage.
The Hajj fund would allow individuals to save and invest money according to their financial capabilities, which would then be invested in Shariah-compliant activities.
The person will be notified once returns on their investment and their savings have reached a point where they are sufficient for the pilgrimage.
source : minvan