Opening Remarks at the 15th SC-OCIS Roundtable
Speaker: Dato’ Mohammad Faiz Azmi, Chairman, Securities Commission Malaysia
Location: Oxford Centre for Islamic Studies, UK
Delivered: 7 September 2024
His Royal Highness Sultan Nazrin Muizzuddin Shah ibni Almarhum Sultan Azlan Muhibbuddin Shah Al-Maghfur-lah, Ruler of the State of Perak Darul Ridzuan and Royal Patron of Malaysia’s Islamic Finance Initiative.

Dr. Farhan Nizami, Director, Oxford Centre for Islamic Studies,

Dato’ Seri Abdul Rasheed Ghaffour, Governor, Bank Negara Malaysia

Alderman Kawsar Zaman, Alderman for Bishopsgate, City of London

Distinguished speakers,

Ladies and gentlemen,
 
Assalamualaikum wrth and good morning.

  1. I am delighted to be back at the SC OCIS Roundtable, here in Oxford. I have had the pleasure of attending a number of the SC-OCIS Roundtables both here in the UK and in Malaysia as a speaker or respondent since 2011, and this morning I am delivering the opening address as the Chairman of the Securities Commission Malaysia. Clearly, it shows you need stamina in Islamic finance to constantly reinvent yourself.
  2. I would like to join Dr Farhan in welcoming His Royal Highness Sultan Nazrin. We really appreciate his continuing support for initiatives such as the SC OCIS roundtables and we are also very grateful for his views and guidance on a number of issues. We are truly blessed by his presence.
  3. And a special thank you to Dr Farhan and his team for hosting us here at this beautiful oasis in Oxford. Now I can quite understand Tan Sri Wahid Omar keenness to return home to his place of study. We also appreciate the presence of Alderman Kawsar Zaman from Bishopsgate who coincidentally was a OCIS scholar at one time.
  4. There is a well-used metaphor about standing on the shoulders of giants. I certainly feel that today and would like to pay tribute to previous SC chairs who have contributed to the Roundtable – Tan Sri Zarinah Anwar who is here today, Tan Sri Ranjit Singh, Dato’ Syed Zaid Albar, Dato’ Seri Awang Adek Hussein; as well as past senior management such as Datuk Dr Nik Ramlah, Dato’ Zainal Izlan and the late Wan Abdul Rahim Kamil; who recently passed away. And of course, we would not be here without the efforts of the current Executive Director of Islamic Capital Markets, Puan Sharifatul Hanizah.
  5. I would also like to acknowledge the presence of the Bank Negara Governor, Dato’ Seri Abdul Rasheed Ghaffour at this roundtable. We were both members of Leadership Council of the MIFC before our current roles. The leadership council is a common initiative by BNM and SC and is chaired by Tan Sri Azman Mokhtar. The Governor and I share many common views on the progress of Islamic Finance. Indeed, many of the successes attributed to Malaysia on Islamic Finance was due in large part to the efforts of past and current BNM governors like Tan Sri Zeti Akhtar Aziz who embedded the promotion of Islamic Finance in the mission of BNM.

Ladies and Gentlemen,

  1. Since the 1930s, when many Muslim nations were colonised, there was a sense of disillusionment then with capitalism and with how their countries were being governed. Many then, looked to other models such as the Socialism, to find alternative answers. It was also in the mid-20th century, that intellectuals in some Muslim countries began promoting the idea of using Islamic principles in economic thought and behaviour.
  2. Muslim economists at the time began promoting an Islamic economic system and suggested alternative models. Mit Ghamir Bank in Egypt, for example, was touted then as a reference for the use of the profit-and-loss sharing model, rather than interest bearing, before it was nationalised by the Egyptian government. We too had our experiment in 1963 with the setting up of the Pilgrims Fund in Malaysia, Tabung Haji, which went on to become the success it is today.
  3. Pioneers of the modern Islamic Financial Institutions felt that for an Islamic model to obtain scale and acceptability, the most effective way was to adapt traditional banking practices but tweaking these practices so they are “Shariah-compliant”. This was done principally to ensure Muslims in Malaysia could conduct their financial matters in a Shariah compliant manner. I am pleased to report that after all our combined efforts since 1963, we have achieved that goal and Muslims in Malaysia are now offered the same financial opportunities and services as everyone else.
  4. However, this approach has had some critics. There are some who feel that there are shortcomings in the current model which need to be addressed. Bringing it closer to home, it was in one of the earlier Roundtables, held in Oxford that one speaker expressed doubt as to whether Islamic institutions had, in fact, a higher moral standing than conventional institutions, pointing out that some Islamic banks were happy to provide financing to companies that were providing deplorable working conditions and squalid housing to their workers. What was worse, was when multinational banks chose to decline lending to those same companies. Another example is that we were constantly being asked was is the position of Shariah Law in terms of the Climate Emergency and the encouragement of ESG practices.
  5. In search of an answer, we realised there was another body of work within Shariah Law that looked at the principles on which Shariah Law was based on. This was Maqasid Al Shariah, which does answer some of the wider questions. Maqasid talks about the true intentions of Shariah Law and has wider considerations than just being compliant. As an attempt to begin a conversation, the SC issued the Maqasid Al Shariah Guidance for the Islamic Capital Market in Malaysia in November 2023 which tries to apply these aspirations and principles in the context of the capital markets. We have been engaging with a number of parties in Malaysia, both foreign owned and domestic, on how these principles can be applied to real products and services. We have also started a dialogue with local players to see how the Maqasid principles can be applied to existing projects and whether some form of screening is appropriate. The guidance itself talks about 6 aspirations and 15 principles and we are now embarking on a journey to see how these principles can be applied on top of Shariah compliance.
  6. This is why our roundtable discussions, are centered on “Humanity in Finance” which is one of the 6 Maqasid aspirations. Humanity is mentioned at least 60 times in the Quran and refers to quality of being kind, compassionate and considerate towards other human beings and other creatures. I hope the panels today and tomorrow will explore how companies can best apply the Maqasid aspirations and principles in their products and services and have better social and governance practices. We also hope to hear about examples or future initiatives that may better align a company’s actions with Maqasid.
  7. Some of the actions needed are urgent. We read every day of companies that focus purely on profit maximisation to the detriment of its stakeholders and the planet. In the context of Climate Change, the data being provided by the scientists on the alarming decrease in biodiversity, the changing weather patterns, the intensity of weather events and the impending rise of the sea levels all of which needs to be factored into the way companies operate.
  8. Another area for companies to focus on is their commitment to Environmental Social and Governance standards. Again, we have a lot of examples in the media of companies who appear to put profit before safety or are indifferent to how they run themselves without considering proper governance and accountability. And there are also many companies who continue to treat their employees badly. The difficulty I feel is sometime in the pursuit of profit, compassion, empathy and basic humanity seems to be forgotten. They do say mirrors serve as a powerful symbol of truth and represents self-awareness and honesty. Perhaps it is time we put a mirror up to our business leaders.
  9. One outcome of this Roundtable we hope, is to see is how these universal values, encapsulated in the Maqasid Al Shariah can best be applied throughout the value chain of a company, from the funding, to delivery of products and services and how they meet stakeholder expectations. It will serve to also make Islamic Finance products and services more relevant to the issues at hand.

Ladies and Gentlemen,

  1. In conclusion, the SC-OCIS Roundtable has always been valuable to us in the SC as it has provided us with food for thought and also some ideas on how to address challenges. I look forward to listening to the various panels over the next two days and also engaging with some of you during the event.

    Thank you again to His Royal Highness and all of you for making the time to attend this roundtable. With that, I wish you all a productive day ahead.

Thank you.
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