In making the call, Former Prime Minister Tun Dr Mahathir Mohamad said banks’ role in the industrialisation of developed countries in Europe and East Asia cannot be understated.
“There is no reason why Muslim banks and financial institutions cannot play the same role. In fact, considering the lack of knowledge and initiatives in this area among Muslims generally and Muslim investors specifically, the Islamic banks must play an even bigger and more aggressive role than conventional banks,” he said in his special address at a Malaysia Showcase dinner in this capital city of Bahrain Monday.
Dr Mahathir said currently there was not a single Muslim country that was fully industrialised, with some of these countries having no natural resources to support industrialisation.
Dr Mahathir said Islamic banks and institutions must have staff who are qualified not just in financial management but also in technology and intricacies of setting up and managing numerous industries that can create wealth and employment.
“Assuming that Islamic banks have these expertise, they can help with the industrialisation of Muslim countries through the promotion of selected industries and businesses and through introducing innovative ways of financing the enterprises,” he said.
Dr Mahathir, who was in the driver’s seat of the Malaysian economy for the past 22 years, said despite the availability of Islamic finance and banking, the Muslim World had not shown the kind of progress the western countries have.
One of the reasons could be lack of knowledge in the wealth management for growth, he said. Furthermore, the very rich Muslim countries have shown an unwillingness to invest their money in a way that could improve the situation in the Muslim world, he said.
“If the availability of Islamic finance is to help create a better future for the Muslim world then the financial institutions themselves must come up and aggressively promote Islamic compatible ways of investing the great wealth of the Muslims,” said Dr Mahathir.
Among the ways are by identifying secure investment opportunities which give fair returns but transgress no Islamic injunctions, he said. He also said Islamic banks have not shown any aggressiveness in promoting their services.
While promoting, he said, it could be better if products offered do not match any product in the Western banking system.
“The Islamic banking and financial system should not follow in the footsteps of the Western financial system in terms of Islamic financial market products.
Admittedly, it is not the Western system that has gone wrong. It is the abuses perpetrated by market players, the speculators and the gamblers who have done this,” said Dr Mahathir.
On this matter, he said, the banking and financial system in the Muslim world must be regulated and must remain under government supervision even if this stifles the performance and the role of the banks in ensuring a better future for Muslims.
At the same time, he said, the very rich Muslims and Muslim countries should value and take care about their management of wealth to prevent any abuses by managers who are usually foreigners.
In this case, the Islamic banks and financial institutions can help in raising awareness of the dangers of being dependent on others, he said.
“It is only if the Islamic financial institutions are aware of the full extent of the role they can play and they are willing to look beyond merely making money available to those who need it, will they be able to represent hope for a better future for the Muslim world,” he added.
The Malaysia Showcase dinner, attended by some 450 industry players and regulators, was organised in conjunction with the Seventh Islamic Financial Services Board Summit, which starts today.