Shariah and sustainability compliance is the way forward for Islamic finance – INCEIF
INCEIF UNIVERSITY

Shariah and sustainability compliance is the way forward for Islamic finance


 

Bandar Seri Bengawan, Brunei, 12 June 2023 – Today, given the importance of sustainability, Islamic finance should not only be Shariah compliance, but also sustainability compliance, says INCEIF University President & CEO Prof Dato’ Dr Azmi Omar.

“The 17 Sustainable Development Goals (SDGs) are consistent with Maqasid Al-Shariah, which are the protection of religion, life, intellect, lineage and wealth. Although Islamic finance (IF) has the tools -Islamic social finance (ISF), Islamic commercial finance (ICF) and microfinance, Islamic capital markets, and blended finance) at its disposal, the proportion of financing and investment to support SDGs is still small compared to conventional finance. At the same time, IF has to incorporate a sustainability agenda into its analysis and decision. Today, given the importance of sustainability, IF should not only be Shariah compliance, but also sustainability compliance,” Dato’ Azmi said at the panel discussion on `Sustainability Finance – Tackling Food Security and Inflation’.

The discussion was held on Day 1 of the Brunei Islamic Finance Summit 2023 (12 – 14 June 2023). Themed ‘Securing A Resilient and Sustainable Future Through Innovative Islamic Finance’, the summit was organised by Brunei Institute of Leadership & Islamic Finance (BILIF) in collaboration with Islamic Development Bank and World Bank Group with the support of Brunei Darussalam Central Bank.

To achieve food security, Dato’ Azmi suggested the adoption of a blended finance between ISF and ICF for the funding of agriculture and food initiatives for micro, small and medium enterprises (MSMEs). One example is the iTekad programme in Malaysia. Other tools such as Zakat funds could be used for seed capital & purchase of machineries while financing could also come from Waqf and Qardhul Hassan funds.

Brunei was ranked 12th out of 136 countries and recognised for its steady development in Islamic finance, according to the IFDI Report 2022. The country also achieved a 31 IFDI score based on 5 indicators – financial performance, governance, sustainability, knowledge, and awareness.

The main objective of food security is to ensure the population has adequate and affordable access to sufficient, safe and nutritious food to meet their dietary needs and preferences for an active and healthy life (Source: World Food Summit, 1996).

“With the exception of GCC countries, many OIC member states fall short of achieving food security. Islamic finance, being a part of sustainable finance, can do more to address this issue,” Dato’ Azmi added.

The summit is a platform for international experts, leaders and practitioners from around the world to discuss the key issues, opportunities and challenges in the world of Islamic Finance. It is also part of part of BILIF’s effort to provide a platform to promote Brunei Darussalam as an Islamic Finance Hub and to feature Bruneian talents in Islamic Finance.  The financial industry has played an active role in advancing Islamic finance in the country. Beyond the financial sector, other industry players such as fintech and telecommunication companies have contributed to the development of Islamic finance, such as the e-Zakat payment gateways and crowdfunding platforms for MSMEs. Another initiative set to boost Islamic fintech and Islamic finance overall is the formation of Syariah-compliant Digital Finance Economic Zone. Brunei was ranked 12th out of 136 countries and recognised for its steady development in Islamic finance, according to the IFDI Report 2022. “

Ends.

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