2022 was seen as a year where the economy of the Maldives is recovering from the COVID-19 pandemic effects. For Islamic finance, not much progress was seen. However, there were a few significant developments that happened which have brought some remarkable positive changes to the Islamic finance industry in the Maldives. The most notable example in this regard was the implementation of the first Shariah governance framework by the Maldives Monetary Authority (MMA). The Maldives was ranked 10th in the Islamic Finance Development Indicator published in the latest 2021 Islamic finance growth indicator report by Refinitiv. In the report, the Maldives was ranked third for Takaful, while for corporate social responsibility activities and corporate governance it was ranked fourth.
Review of 2022
In 2021, the Shariah Council of the MMA constituted four members and in the same year, the MMA finalized the Shariah Governance Framework for Islamic financial institutions regulated by the MMA which came into effect on the 1st January 2022.
In 2022, the International Islamic Trade Finance Corporation signed a US$189 million trade financing agreement with the State Trading Organization — the corporation’s largest syndicated Murabahah trade financing agreement. The Maldives Member Country Partnership Strategy (2022–2025) titled ‘A Resilient and Sustainable Life, and Diversified Economy for Maldivians’ was launched by Ibrahim Ameer, the minister of finance of the Maldives and Dr Muhammad Al Jasser, the president of the IsDB on the sidelines of the 47th Annual Meeting of the IsDB Group in Sharm El-Sheikh, Egypt.
The Housing Development Finance Corporation (HDFC) celebrated its 10th year of Islamic operation via HDFC Amna. New listing rules were published by the Maldives Stock Exchange in 2022 effective from the 30th June 2022 and Chapter 3C deals with Sukuk listing. One major change found is in Rule 36(c), where it states that all Sukuk listed on the official list shall be tradeable in the secondary market.
In Rule 1.4.3 of the old Listing Rules effective on the 21st December 2015, it was stated that: “Notwithstanding anything in the rules to the contrary, the requirements of the Sukuk agreement shall be complied with all Sukuk transactions conducted through the exchange. Sukuk may be exchanged off market in so far as provided in the Sukuk agreements.”
Amana Takaful Maldives, the only fully-fledged Takaful company operating in the Maldives under a conventional insurance license, recorded the highest dividend ever in the history of the company in 2022.
Preview of 2023
2023 is anticipated to be a hopeful year for Islamic finance. SME Development Finance Corporation will operationalize its Islamic window and offer Shariah compliant solutions for nano, small, micro and medium enterprises. Further, the Capital Market Development Authority will revise the regulation on registration of Shariah advisors to increase the number of Shariah advisors.
In order to strengthen the Islamic finance industry in the Maldives, it is hoped that the MMA would consider implementing a separate legal framework to regulate Takaful in the Maldives as currently there is no separate Takaful license issued in the Maldives and the same legal framework applicable to conventional insurance is also applied to Takaful.
Apart from this, there is also a need for the MMA to regulate General Takaful and Family Takaful separately by providing clear guidelines to do so. With Industry 4.0, there is also a need for the Maldives to introduce modes of financing options by introducing crowdfunding for Gen Z and Gen Alpha to participate actively in the finance industry.
Further, in 2023, there is potential for Islamic financial institutions to adopt technology to provide convenience to customers and create synergy between Islamic commercial finance and Islamic social finance while paving the way for financial inclusion. Islamic wealth management is also a concept that could be promoted in society where Islamic financial institutions could provide for retail customers who are in need of such services.
Conclusion
In 2022, though the Maldives did not see major developments in Islamic finance, it is good to see the Maldives further developing the existing infrastructure for Islamic finance by adopting good governance practices to achieve Shariah compliance. It is hoped that in 2023, the Maldives will strive toward taking Islamic finance to new heights.
Dr Aishath Muneeza is the chairperson of the Shariah Advisory Council, Capital Market Development Authority, Maldives. She can be contacted at [email protected].