April 30, 2019
KUALA LUMPUR – As a global pioneer in Islamic finance, Malaysia aims to harness the growth of Islamic finance and financial technology (FinTech) to enhance financial inclusion and open up access to financial services for the underserved individuals as well as micro, small and medium enterprises (MSMEs).
Over 1.7 billion adults or one-third of the world’s adult population are estimated to not have access to formal financial services – many of them in developing countries. According to the Global Findex Database, 40 out of the 48 member countries in the Organisation of Islamic Cooperation (OIC) have formal account penetration rates that are lower than the world average of 50 percent.
This issue, along with elements required for the sustainable use of Islamic finance to address financial inclusion, were discussed at a conference yesterday jointly organised by the Securities Commission Malaysia (SC), World Bank Group Global Knowledge and Research Hub in Malaysia, and the International Organisation of Securities Commissions (IOSCO) Asia Pacific Hub also located in Malaysia.
Themed “Islamic Finance: A Catalyst for Financial Inclusion”, the annual conference gathered over 300 development practitioners, policy makers, regulators and experts to explore policy, regulatory and institutional challenges and opportunities. The conference featured discussions on the role of Islamic finance including Islamic social finance, such as waqf and zakat, in enabling greater access to financial services to enhance social well-being as well as drive economic activities. The use of technology to support Islamic finance in facilitating greater inclusion was also deliberated.
Datuk Syed Zaid Albar, Chairman of the SC said, “Islamic products and services for financial inclusion hold the promise for a shared and better future. Therefore, increased digitisation will certainly reduce costs and enhance speed, convenience and appeal. In this regard, the capital market provides entrepreneurs and MSMEs both conventional and Shariah-compliant avenues to access alternative sources of financing. Equity crowdfunding and peer-to-peer financing platforms, as well as venture capital and private equity, are available to meet their needs at different stages of their businesses.”
Dr. Firas Raad, World Bank Group Representative to Malaysia and Country Manager said, “Islamic finance can play a role in addressing the high levels of poverty in the OIC countries, which account for over 40 percent of those living on less than USD1.25 a day and is home to one-third of the global population living in extreme poverty, defined as those living on less than USD1.90 per day.”