Could you provide a brief journey of how you arrived where you are today?
I was entrusted to run an interest-free banking unit of a conventional bank, Krungthai Bank Public Company Ltd [KTB], in 2001 following the announcement by the Bank of Thailand in 2000 that allowed conventional banks to open an Islamic banking unit. My experience in conventional banking and knowledge of Islamic banking enabled me to open KTB’s Islamic banking units in many provinces, particularly in the southernmost parts with a Muslim majority.
In 2002, the first full-fledged Islamic Bank of Thailand [IBT] unit was set up under the Islamic Bank of Thailand Act 2002. Then, the government decided to merge KTB’s Islamic banking units with IBT. I was entrusted with the responsibility of overseeing IBT post-merger.
What does your role involve?
Under the Act, the manager has to possess the knowledge and expertise in finance, banking or other field useful to the bank’s business and to perform the duties in compliance with the bank’s purpose and policies set by the board of directors.
What is your greatest achievement to date?
The sign of breaking even is positive starting from 3Q2007 as the bank experienced operational profit for the first time after its inception in 2003. Following an increase in the bank’s paid capital from THB1 billion [US$31.74 million] to THB4.3 billion [US$136.49 million] this month, which makes the bank a public enterprise as the government becomes the biggest shareholder, the bank will operate more smoothly with the increased single financing limit on a wide range of Shariah compliant products.
Which of your products/services deliver the best results?
Apart from trade financing services, which bring more income to the bank in the short term, our credit card refinance program received overwhelming response. The program helps clients re-manage their spending habits comfortably within their present income margins. With a negligible rate of non-performing loans, the bank is planning to launch another phase of the program upon public request.
What are the strengths of your business?
The bank has an alternative feature in the industry catering to Shariah banking services for both Muslim and non-Muslim clients. Muslims call on the bank due to religious restrictions while non-Muslims like the bank because it offers services like other banks do. The bank also provides competitively better rate of returns as well as fixed rate of financing.
What are the factors contributing to the success of your company?
Besides having competent personnel with real teamwork in every field of banking operation, public understanding, government support and political stability are no less important.
What are the obstacles faced in running your business today?
The structure of taxation in this country is not conducive to carry out Islamic banking services as the bank’s operation is mostly based on buy-sell transactions and does not altogether rely on borrowing and lending. The bank would still face recurrent high operating cost without tax reform in favor of Islamic banking operations.
Political unrest in the southernmost region of this country is another hindrance to the bank’s growth. Until then, most government initiatives to develop the region in the Indonesia-Malaysia-Thailand program (IMT-GT) and the Halal Food Industrial Center that would require Islamic financial services will be at a standstill.
Where do you see the Islamic finance industry, maybe in the next five years?
The global industry is expected to grow at about 15% annually. Yet, such a steep rate seems bigger and faster than the local growth rate of approximately 4% to 5% per year. However, Islamic finance will permeate all areas of the financial industry, locally and globally, and operate side by side with the conventional system.
The same banking officer can offer both Islamic and conventional products at the same time upon the customer’s request. In the case of Thailand, I would like to see more Islamic players in all sectors of the Islamic financial industry.
Name one thing you would like to see change in the world of Islamic finance?
For this market to really take hold, we need to achieve some standardization in products and structures. Conventional markets develop through standardized legal and regulatory frameworks but Shariah judgments are often much more subjective, which means that virtually every transaction has to be reviewed independently. Given the scarcity of qualified scholars, failure to standardize may prove to be a restraint on growth.
The Islamic Bank of Thailand was initiated in 1994 when the Royal Thai Government signed the “Indonesia-Malaysia-Thailand: Growth Triangle — IMT-GT Project”. Under the project, the government created a development plan for five southern provinces specifically as a link.