Could you provide a brief journey of how you arrived where you are today?
After being involved in auditing, as an articled clerk in the UK and a short stint with Pricewaterhouse in Kuala Lumpur, I joined Amanah Merchant Bank (now known as Alliance Investment Bank) as its management accountant, responsible for establishing a management information system and the computerization of all its operations.
In 1994, I was reassigned to establish and head its Islamic banking unit. I was also a pioneering member responsible for the establishment of the Association of Islamic Banking Institutions Malaysia (AIBIM) in July 1995 and took over the helm after its executive director (ED) resigned in January 2008.
What does your role involve?
Besides managing AIBIM’s daily operations, the ED’s role is to uphold the AIBIM constitution, ensure that AIBIM’s objectives are met, carry out the resolutions of the AIBIM council and enhance the Islamic finance industry’s and AIBIM’s image locally and globally. This involves a lot of dialogues, consultations and collaboration with the industry’s stakeholders that include the regulators, practitioners, Shariah scholars, ancillary professionals (lawyers, accountants and tax consultants), researchers and academicians.
What do you consider your greatest achievement to date?
Our biggest achievement would be in that the Islamic banking industry has unanimously adopted two standardized interbank master agreements for Islamic deposit-taking and placement transactions, known as the Interbank Murabahah Master Agreement (IMMA) and Master Agency Agreement (MAA).
AIBIM, at the request of its members, developed the MAA and IMMA. The development was completed after five months of intense work spearheaded by the AIBIM Secretariat, involving close collaboration among its members as well as with Bank Negara Malaysia, Shariah scholars and legal experts.
It is our hope that the documents will increase the intensity of Islamic interbank activities and foster greater transparency, robustness, operational efficiencies and consistency in Islamic financial transactions. Being the world’s first of their kind, we also hope the master agreements will also become benchmark documents for the global Islamic financial services industry.
What are the strengths of AIBIM?
Our strength has always been the steadfast support of our members. AIBIM presently has a membership of 20 Islamic banks and Islamic banking scheme operators. Zukri Samat, the managing director of Bank Islam Malaysia, is the current president of AIBIM.
What are the challenges that AIBIM faces today?
Diminishing and active movement of local Islamic finance talents
Against an environment of a rapidly evolving Islamic financial industry and the growing significance of Islamic financial institutions globally, Islamic finance talents have become a defining factor in sustaining the performance and competitiveness of the Islamic finance industry.
The active migration and movement of experienced local Islamic finance talents comprising Islamic bankers, Shariah advisors and risk managers — overseas and locally — is disrupting and impeding the growth of the local Islamic finance industry. This has also diminished AIBIM’s access to pioneering and experienced Islamic financiers, which is vital to the development of this industry that is still in its infancy.
Islamic bankers are using the conventional banking cap
As most of the current local Islamic bankers came from a conventional banking background, the challenge is to overturn the conventional banking thoughts.
Limited public awareness in Islamic banking
For the retail Islamic banking to flourish, the public needs to be aware of Islamic banking. The challenge is to create an effective outreach program and awareness campaign.
Legal and regulatory framework of Islamic finance
Much improvement is still required in developing the foundation of Malaysia’s legal and regulatory infrastructure for Islamic finance, as the law of the land is still skewed toward conventional banking. AIBIM is embarking on a review of the relevant statutes and legal practices to ensure that Islamic finance operations are not disadvantaged.
Name one thing you would like to see change in the world of Islamic finance.
With the many untapped opportunities in Islamic finance, together with concerted efforts by the stakeholders to promote Islamic finance, the industry will continue to be fast growing. Over the next five years, I believe the industry is likely to witness:
• The phasing out of conventional banking mirrored/replicated products and the introduction of more Shariah-based rather than Shariah compliant Islamic banking products.
• The introduction of standards for the Islamic banking industry, aimed at standardizing practices, procedures, products and documentation. This will accelerate the activities of its members and protect the customers against unhealthy practices while mitigating confusion about Islamic banking.
• An expanding pool of qualified and dedicated Islamic bankers.
• A flourishing Islamic foreign currency business.
• Malaysia being an Islamic financial hub.