Islamic Finance Can Help Prevent Future Crisis

SOME of the features and underyling principles of Islamic finance may avoid or minimise the impact of future economic cycles, said the acting chief executive of the Centre for Islamic Banking, Finance and Management.

Makhtar Abdullah, who is a moderator for the 16th Asean Federation of Accountants Conference 2009, said, “The recent economic crisis which evolved around the financial system will further stimulate and hasten growth of Islamic finance as an alternative to the conventional system.”

He said the world is looking for alternatives in the wake of the crisis.

Now, he said, the push for Islamic banking will be faster and in bigger scale, so there will be more acceptance in the global economy.

The crisis, he said, might even be seen as an advantage for the Islamic banking sector as players were not directly affected.

Makhtar said on a global scale, education is still needed to get the knowledge and confidence across on Islamic finance.

“Everybody has to play their roles and Brunei is positively projecting the same image as after four decades of evolution, Islamic finance has a firm footing in developed markets globally,” he said.

Makhtar said the main feature of Islamic banking is that the foundation isn’t so much on liability and borrowing but more on the sharing of risks.

“It would be beneficial because customers would have a say in what they want and transactions would be more transparent as whatever business leads the financial institution wants to get involved. There will be more disclosure involved so it makes more sense to everyone,” he said.

In Brunei, Islamic finance has a good and positive image and the establishment of his group is part of the image Brunei is projecting.

“As people involved in Islamic banking work more with other global players their knowledge increases and (they) become more well trained with the proper infrastructure to accompany that,” he said.

Source : TBT