Kuala Lumpur, 24 September, 2020 – INCEIF today signs a Memorandum of Commitment (MoC) with Bank Indonesia Institute (BINS), a department at Indonesia’s central bank Bank Indonesia tasked with training and research.
The MoC would pave way for closer cooperation between INCEIF and BINS in realising the common objective of spearheading innovations in Islamic finance and economics through research and training.
INCEIF President & CEO Prof Dato’ Azmi Omar said: “The world has changed, rapidly so in recent months. How our industry – Islamic banking, finance and economy – chooses to respond to these changes may be a generation-defining moment. Can Islamic finance use this opportunity to become truly responsible, inclusive and ethical, while at the same time contributing to the planet’s growth and development? I believe we can, and one of the ways is through research that is industry-relevant and addresses topical issues. “
In establishing a world class centre for education, research and training in Islamic finance, of importance, is the combined collaborative efforts among industry players, researchers, academicians and Shariah scholars. The critical shortage of available technical talent in the Islamic financial industry can be addressed if all the relevant participants to the Islamic financial sector are willing to forge their efforts together on a continuous basis to elevate the performance level of Islamic finance.
“The future success of Islamic finance will depend on the co-ordinated and concerted collaborative efforts of all stakeholders. In this regard, all parties should put in relentless efforts to continuously promote the development of Islamic finance into one which is progressive, dynamic, responsive and sustainable. While the increasingly more competitive prevailing environment raises the pressures to produce immediate-term results, it is the investment in human capital and in research and development that will secure the long-term sustainability of the industry,” Dato’ Azmi added.
The collaboration would establish a network of mutual co-operation that would strengthen the efforts between INCEIF and BINS in the areas of curriculum development, research and training. It would include exchange of faculties, scholars and researchers, and resources in Islamic finance. Both INCEIF and BINS looked forward to strengthening the quality of research through joint research activities and publications, journal enhancement and technical assistance.
To mark the MoC, a panel discussion on `Rethinking the Role of Islamic Economics and Finance Post Pandemic: Driving Change through Research’ was hosted by BINS. The panel discussion, moderated by Dato’ Azmi, was joined by panellists Dr Sami Al-Suwailem, Acting Director General, Islamic Research and Training Institute; Dr Dadang Mulyawan, Director of Sharia Financial and Economic Department, Bank Indonesia; and Prof Dr Mohamad Akram Laldin, Executive Director, ISRA.
The virtual event saw participation from nearly 700 academicians, researchers and practitioners in Indonesia and Malaysia. It was part of the series of events held in conjunction with ISEF (Indonesia Shariah Economic Festival) 2020, an initiative of Bank Indonesia in partnership with key stakeholders of the Indonesian Islamic economic and finance industry.
In her keynote address, INCEIF Chancellor and BINS Honorary Board Member Tan Sri Dr Zeti Akhtar Aziz said the sharing of experiences and expertise between Indonesia and Malaysia would enable both parties to work collaboratively to spearhead the development of Islamic finance in the region and globally, specifically through research works.
The pandemic has the world by surprise. It has therefore highlighted the importance of having the infrastructure for disaster preparedness, thereby allowing for prompt response and minimising of the cost of the crisis. COVID-19 brought us into uncharted territory. Its mitigation and resolutions will involve the search for answers. Ultimately it will be dependent on high quality applied research, but that which is also aligned with societal goals, to yield trustworthy data and actionable information.
“Adding value to the economy while also meeting societal goals are among the basic tenets of the Islamic economy and Islamic finance. As the broader economy shifts towards a recovery path, we need to be reminded yet again on the importance of supporting and serving the poorer segment of the population who have the least resources that are found in both developing and developed economies. As governments, multilateral institutions and humanitarian agencies search for ways to manage the aftermath of the crisis, financial inclusion would need to be an integral part of the new programmes so that the abject poor and low-income households will also be part of the recovery,” Tan Sri Zeti said.
While Islamic finance already has a built-in centralised screening process that looked at the Shariah compliance, it has yet to have structures to assess the impact of such financing activity. Similar emphasis therefore needs to be placed on the assessment of the impact of such finance.
“An area of applied research which may have high social impact therefore needs to be given priority. Areas in particular could include Islamic social finance tools with the objective to design potential instruments for this purpose. We need to look into the identification of potentially practical and viable value propositions that would also focus on the delivery and application of fintech for such Islamic social finance instruments. Of importance is the delivery system, the collection and distribution platform for such instruments including for existing arrangements such as zakat, waqaf and sedekah, with the objective of maximising their social impact,” she added.
Applied research should then also focussed not only on such contemporary and innovative instruments, but also on how to measure the impact that the instruments have on society and to identify the limitations and gaps between the potential and actual output. This could then be followed by a framework that would enable a rigorous assessment of the impact of the various aspects covered by each type of the Islamic social finance tools.
With the financial reforms initiated by the international community post the Great Financial Crisis of early 2000s now largely in place, the imperative for future finance was not only to be stable and resilient but also to become an anchor to its bedrock —the real economy — and to generate positive benefit for the wider society and to also take into account environmental sustainability, Tan Sri Zeti said.
“All of us have a shared responsibility to use this period of disruption to reflect and ensure that what we do next is truly relevant to our lives, our community, and to the survival of our planet,” said Tan Sri Zeti.