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PP18986/07/2016 (034546)
eISSN 2948-3611
ISSUE 4 | DECEMBER 2022

MAQASID
AND ISLAMIC
FINANCE
What’s Next?
Datuk Prof. Dr
Mohamad Akram Laldin

Islamic Finance Law and

Regulations in Malaysia: A
Macro Maqasidic
Approach

Digital Finance and

Maqasid al-Shariah

Islamic Finance
and the Mission to
Net Zero

ESG & Sustainable

Investments in
Turkey
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PP18986/07/2016 (034546)
eISSN 2948-3611
Contents
2 Editor’s Note
ISSUE 4 | DECEMBER 2022

By Dr Marjan Muhammad
Advisor (Director, Research Quality Assurance & Publications,
Datuk Prof. Dr Mohamad Akram ISRA Research Management Centre, INCEIF University)
Laldin
akram-isra@inceif.org
In Person
Editor-in-Chief
Dr Marjan Muhammad
3 Maqasid and Islamic Finance: What’s Next?
By Datuk Prof. Dr Mohamad Akram Laldin
marjan-isra@inceif.org (Executive Director, ISRA Research Management Centre, INCEIF University)

Managing Editor INCEIF Think Tank

10
Khairun Najmi Saripudin
najmi-isra@inceif.org
Maqasid al-Shariah vis-à-vis Islamic and Green Finance:
The Malaysian Leadership
Copy Editor By Dr Noor Suhaida Kasri
Noor Fuzana Yaakub (Senior Research Fellow, ISRA Research Management Centre, INCEIF University)
fuzana-isra@inceif.org
Hafizzudin Harun
Publications Manager (Trainee, ISRA Research Management Centre, INCEIF University)
Noor Aznir Nizam Noordin

18 Islamic Finance Law and Regulations in Malaysia:

aznir-isra@inceif.org

A Macro Maqasidic Approach

Coordinating Producer
Noorsyarina Mohd Sapiai By Prof. Dr Younes Soualhi
syarina-isra@inceif.org (Senior Research Fellow, ISRA Research Management Centre, INCEIF University)
Assoc. Prof. Dr Said Bouheraoua
Published by (Director, Research Development and Innovation, ISRA Research Management
International Shari'ah Research Centre, INCEIF University)
Academy for Islamic Finance (ISRA)
Research Management Centre
Practitioner's Insights
28
An imprint of INCEIF University
Jalan Tun Ismail Digital Finance and Maqasid al-Shariah
50480 Kuala Lumpur By Ahmad Hamzah Mat Daud
Tel +603 7651 4000
Fax +603 7651 4094
(Head, Shariah Division, MBSB Bank Berhad)
Hakimi Mat Salim
Designed by (Senior Executive, Shariah Division, MBSB Bank Berhad)
CIME RESOURCES
15-1, Jalan 2/27E News @ INCEIF
36 INCEIF University Appoints BNM Governor Tan
Seksyen 10, Wangsa Maju
53300 Kuala Lumpur
cimeresoc@gmail.com Sri Nor Shamsiah Mohd Yunus as Chancellor and
Scholar Tan Sri Mohd Daud Bakar as Pro-Chancellor

38 INCEIF Strengthens its Line-Up of Professor of Practice

40 ISRA Consulting Acknowledged as The Best

Islamic Consultancy Firm for 4th Consecutive Year
Events @ INCEIF
43 Sultan Nazrin Shah, Royal Patron of Malaysian Islamic
Finance, Officiates INCEIF University’s New Campus
© 2022 INCEIF University
All rights reserved. 46 Book Review Forum: Conservation of the Environment
in Islamic Law by Sheikh Dr Yusuf al-Qaradawi
Disclaimer
The views expressed in this
publication are solely of the
authors and do not necessarily
48 INCEIF University’s 13th Convocation

52
reflect the views of INCEIF
University. While reasonable efforts Islamic Fintech: An Enabler of Financial Inclusion
have been made to ensure that
the contents of this publication
are factually correct and properly
referenced, INCEIF University does
not accept responsibility for the
53 Intellectual Discourse: Ibn Khaldun’s Circle of
Justice as a Model for Comprehensive Development:
accuracy or completeness of the A Practitioner’s Perspective
content and shall not be liable for

55
any loss or damage that may be
occasioned directly or indirectly INCEIF Signs MoU with Universitas Sebelas Maret
through the use of, or reliance on,
the content of this publication,
including its translation into
languages other than English. 56 MTA and INCEIF University Collaborate to Develop
Maqasid-Based Scorecard for the Malaysian Takaful Industry
Editor'sNote
Dear faithful readers,

Welcome to our final issue of IF HUB 2022, which encapsulates outstanding thoughts
and views on ‘Maqasid and Islamic Finance: What’s Next?’. It is interesting to note that
many events held at INCEIF University during Q4, 2022—since the official launch of our
new green-city campus on 27 October 2022—also embraced the same theme that IF
HUB covers in this issue.

Our interview with the renowned scholar, Datuk Prof. Dr Mohamad Akram Laldin, in the In
Person Column unveils the role of maqasid al-Shariah in building the strong foundation
of the Islamic finance industry and how the maqasidic framework could shape Islamic
Finance 2.0.

In the INCEIF Think Tank Column, Dr Noor Suhaida Kasri and Mr. Hafizuddin showcase
Malaysian leadership in championing maqasid and Islamic green finance, while Prof.
Dr Younes Soualhi and Assoc. Prof. Dr Said Bouheraoua examine the macro maqasidic
approach of Islamic finance law and regulations in Malaysia.

Meanwhile, the Practitioner’s Insights Column highlights the relationship between

digital finance and maqasid al-Shariah and underlines key maqasidic principles for
digital finance to conform with.

Among the maqasid-related events organised on campus in Q4, 2022, are: Book Review
Forum on Conservation of the Environment in Islamic Law, Intellectual Discourse on Ibn
Khaldun’s Circle of Justice as a Model for Comprehensive Development, and the launch
of Malaysian Takaful Association (MTA) and INCEIF University’s collaboration to develop a
maqasid-based scorecard for the takaful industry in Malaysia.

On behalf of the editorial team, we would like to welcome Tan Sri Shamsiah
Mohd Yunus and Tan Sri Mohd Dr Daud Bakar as the newly appointed
Chancellor and Pro-Chancellor, respectively. Also, congratulations
to our Professors of Practice, Tan Sri Abdul Wahid Omar and Pn Suri
Hanim Mohamed for their reappointment and new appointment,
respectively, on 1 October 2022.

Not to forget, my heartfelt appreciation to everyone who has

contributed to the successful publication of this IF HUB issue.
Until we meet again in 2023, I wish everyone a very happy
new year. May the year 2023 bring more prosperity, joy and
blessing from Allah the Almighty.

Happy reading!

Dr Marjan Muhammad
Editor-in-Chief
 In Person 3

MAQASID
AND
ISLAMIC
FINANCE
What’s Next?
INTRODUCTION
The term maqasid al-Shariah (objectives of
the Shariah), especially in Islamic finance,
is phenomenal. Most Islamic financial
institutions have started implementing
value-driven and impact-focused practices
to achieve maqasid al-Shariah.

Maqasid al-Shariah constitutes the By: Datuk Prof. Dr Mohamad

Akram Laldin
objectives of the Shariah as a system
Executive Director,
of life and comprises the fundamental ISRA Research Management
Centre, INCEIF University
philosophical foundations that serve as
guidelines and justifications for Islamic
finance’s raison d’être. Citation:
Laldin, M.A. (2022),
‘Maqasid and Islamic
finance: what’s next?’, IF
HUB, Issue 4, December,
pp. 3-9.
 IFHUB
Issue 4
4 December 2022

Generally, everything that brings benefit

and prevents harm can be considered
part of maqasid al-Shariah.

The intrinsic values of

​​ Islamic principles The IF HUB team is privileged to interview
are in line with the vision of inclusivity, a prominent Shariah scholar, Datuk Prof.
sustainability and economic prosperity. Dr Mohamad Akram Laldin who is also
Shariah strongly emphasises a balance the Executive Director of ISRA Research
between wealth creation and wealth Management Centre of INCEIF University,
circulation. As a result, this encourages to discuss the role of maqasid al-Shariah
fairness and courtesy in promoting the in building the strong foundation of the
attainment of benefits as well as preventing Islamic finance industry.
harm. When developing strong foundations
for Islamic finance, this aspect should be
addressed as a necessary component.

QUESTIONS
Q1 The importance of maqasid al-Shariah
In general, why is maqasid al-Shariah important in the development of Islamic
finance?

A1 Maqasid al-Shariah are objectives and wisdom prescribed by the Shariah in all its
rulings to protect and preserve the benefits and interests (maslahah) of society.
Generally, everything that brings benefit and prevents harm can be considered
part of maqasid al-Shariah. Maqasid is important in Islamic finance as it provides
us with wisdom in all our financial dealings. Fulfilling maqasid is important as it will
generate the value proposition of Islamic finance. Maqasid entails looking at the
impact of the decision that we made, meaning that before final decisions or rulings
are decided on any issues, maqasid tells us to investigate the impact of what we
are doing. This is a very important element to ensure holistic decision which does
not only look at the permissibility (halal) of the products and services but also
ensure it is wholesome (tayyib), noble and bring benefit and prevent harm to the
society and entire humanity. For example, when Islamic finance instruments are
used to finance any projects or provide any services, it must ensure the instruments
are Shariah compliant, and the outcome is beneficial. For instance, in providing
financing for any project, proper assessment must be made so the outcome will
not harm the environment or lead to global warming or any other adverse effect
on society and the universe. Islamic finance must take into consideration all these
factors before approving any financing proposal so as not to associate themselves
with any activities that might be detrimental to society and humanity at large.

Therefore, Islamic finance must be seen as a system which is not only concerned
about fulfilling its legal requirement but also a system that is holistic enough to
consider the impact of whatever they are contributing towards people and the
planet.
 IFHUB
Issue 4
December 2022 5

Q2 Implementation of maqasid al-Shariah

By considering the concept of adl and ihsan, how do Islamic financial institutions
(IFIs) strike a balance between profit generation and maqasid al-Shariah
implementation?

A2 In Islamic finance, the concepts of adl and ihsan are very important to be
propagated and implemented, especially when we are talking about administering
the finances of the people and assisting the people whether in their daily lives or
all the challenges in their lives. Actually, the concept of maqasid al-Shariah is not
against making a profit. However, we must strike a balance between making a
profit and assisting people with their needs. That is why we can see that scholars
in Islamic finance always emphasise that we need to look into the welfare of
the people and not just think about profit-making in whatever activities we are
undertaking in Islamic finance. During the last pandemic, for instance, we have
seen how Islamic financial institutions in some jurisdictions have assisted those
in difficulties. For example, the Shariah Advisory Council of Bank Negara Malaysia
issued a resolution that Islamic financial institutions which provide moratoriums
to their customers should not compound their clients when extending the period
for them to repay their debt. This is one of the very good examples of how Islamic
banks combine the concept of ‘adl wa ihsan and, at the same time, work towards
achieving their financial objectives.

Regarding this concept of ‘adl wa ihsan, one of the misconceptions we need to

correct is that we must understand that Islamic banks and financial institutions
are not charitable or welfare organisations. Sometimes certain quarters of society
might think that when it comes to pricing, for example, they would expect that
Islamic banks’ pricing will be much lower than conventional banks’ pricing, but this
is not correct. We have to understand that Islamic banks, similar to conventional
banks, have a responsibility towards their depositors, investors and shareholders.
There are certain expectations for them to generate income to sustain as well as
to provide returns to the stakeholders who are investing in the bank. Therefore,
ensuring that Islamic banks strike a balance between profit-making and serving
society is crucial. Creating such a balance between financial outcomes and catering
to society’s needs is very much in line with the objectives of Shariah.

Q3 ESG, SGD and VBI

Nowadays, industry players are starting to comprehend and implement maqasid
al-Shariah in business operations to ensure cohesive alignment between
maqasid and global sustainable agendas such as SRI, ESG and SDG. What are
your thoughts on this?

A3 Maqasid al-Shariah, is the overarching concept that includes all the other concepts
such as SRI, ESG, SDG, VBI and other similar concepts. I strongly believe that all
these noble concepts are generally in line with the objectives of Shariah, and we
have to look into the different criteria and values that can be obtained from all
these concepts. As pointed out earlier, maqasid al-Shariah encompasses all that
brings benefit and prevents harm to society. All these concepts were generally laid
down to benefit the industry at large.
 IFHUB
Issue 4
6 December 2022

All these concepts can be aligned with Islamic principles, and very few issues contradict
the Shariah, such as the interpretation of gender equality. Shariah scholars showed
great flexibility when they ascertained that these concepts are in line with maqasid
al-Shariah, entrenching the universal values of Islamic finance.

In fact, there is no significant difference between the notion of maqasid al-Shariah

and these concepts as they are compatible with each other, and the only difference is
in the means (wasa’il). Maqasid al-Shariah is fixed and aims at establishing maslahah
and preventing or removing mafsadah. On the other hand, means (wasa’il) are subject
to change and can be categorised with the nature of the maqasid they serve and
should be customised to successfully achieve the objectives of Shariah in the context
of ever-changing circumstances.

The maqasid discussion in the financial sphere should be extended to integrate

various sustainable development instruments (i.e. SRI, ESG and VBI) to provide a grand
framework on the integration between these concepts and maqasid al-Shariah, and
the direction of how financial transactions should be arranged in an Islamic economic
system. By pursuing sustainable development, instruments such as SRI sukuk and
Shariah compliance can work hand-in-hand, and the Islamic finance industry would
benefit from a larger investor base and gain broader mainstream relevance.

In this context, the role of Shariah scholars should not be limited to approving the
Shariah compliance of the product but also include ESG, SDG, SRI, and VBI goals and
values. Furthermore, Shariah scholars should also extend their role to develop new
innovative products that are not necessarily fully profitable to IFIs but would help
society achieve and reach these goals.

One of the tools that may entrench all the above concepts is the integration of waqf,
zakat and sadaqah within the financial sector. Unlocking the potential of these Islamic
social finance instruments could play an efficient role in poverty alleviation, empower
vulnerable groups in society, and ultimately enhance the contribution of Islamic social
finance to meeting sustainable development needs.

In addition, the emergence of fintech should trigger innovations among the Islamic
finance industry players and promote creativity by providing new perspectives and
practices in financial transactions. Therefore, Shariah scholars should understand the
technical know-how of the sophisticated financial instrument and the implementation
of fintech in Islamic finance to keep pace with the development that is taking place in
the market. In this regard, Shariah scholars and industry players must work together
to produce innovative Shariah-compliant products that fulfil society’s needs and help
realise all the above concepts, which is in line with maqasid al-Shariah.
 IFHUB
Issue 4
December 2022 7

An important area to be explored is how to

connect the different social finance tools
we have in Islam with Islamic finance.

Q4 Untapped potential in maqasid al-Shariah

The IFIs have endeavoured to refine their products and services offerings to be
more value-driven in response to the need of their customers. In your opinion,
what unexplored areas/untapped potentials can the industry consider to
improve its overall performance and development?

A4 Islamic finance has developed tremendously over the past decades, and now
we can see many products on the shelf; however, there are areas in which we
can still do more or which are considered part of the untapped areas of Islamic
finance. At the moment, the perception generally among some people is
that Islamic finance is not much different from conventional finance because
Islamic finance focuses on providing financial services to the rich, and the rich
are getting richer. While the poor have not benefited from Islamic finance,
I think this is one of the areas that we need to look into, among others. How
Islamic finance can assist the small and medium enterprises (SMEs) industry is
one of the areas in which I believe Islamic finance has to look into it and provide
a solution for people who want to embrace themselves and try to contribute to
the economy. If we examine the experience of some countries, take for example,
Indonesia. We can see that the SME industry is growing, and Islamic financial
products are being utilised to develop SMEs in Indonesia. I believe that Islamic
banks have the opportunity to contribute more towards assisting SMEs.

Perhaps another area that Islamic finance can focus on is how to assist startups.
When people want to start a new business, they need capital, so Islamic banks
need to assist those who want to start new businesses. There are several potential
products as well as contracts in Shariah that can be used to empower these
people in their businesses. For instance, Islamic crowdfunding platforms can be
created to assist this business segment.

Another important area to be explored is how to connect the different social

finance tools we have in Islam with Islamic finance. Islamic banking is one of
the segments in the entire economic system. Over and above that, we have the
waqf, zakat and sadaqah institutions. How can these institutions be deployed to
benefit the community at large? We can see that quite a number of institutions
have tried to deploy zakat money, particularly Islamic welfare institutions, to not
only assist the poor but also to assist them in building their life by providing them
with capital to start businesses. The banking system has a solid infrastructure
that can be used for this purpose, so why not use the available infrastructure
to empower the institutions of waqf, zakat and sadaqah? I believe this is an
important area that we need to embrace towards fulfilling the objective of
Shariah in coming up with a better solution for the society.
 IFHUB
Issue 4
8 December 2022

Q5 Islamic Finance 2.0

During the launch of INCEIF University’s new campus, His Royal Highness Sultan
Nazrin Muizzuddin Shah raised some questions for different Islamic finance
stakeholders to ponder and find solutions:
“To make Islamic Finance 2.0 a reality, therefore, we must also strive to be more
authentic to the true spirit of Islamic law, the maqasid… How can we interpret
and articulate this traditional, sacred framework into practical, measurable
and trackable solutions to address today’s disruptive shocks? How can we
ensure that the fiqh, the jurisprudence of Islam, has caught up sufficiently with
the rigorous requirements of modern-day finance?
Any feedback from YBhg. Datuk Prof.?

A5 Indeed, I strongly believe that the statement

of His Royal Highness Sultan Nazrin is very
relevant. Particularly when he mentioned
that the Islamic fiqh or ruling has to be
commensurate with the reality on
the ground and find a solution for
the people on the ground based on
the notion of maqasid al-Shariah,
I believe this is one of the very
important points that we need to
ponder on. Nowadays, people are
talking about the value
proposition of Islamic
finance.

Of course, we always mention that Islamic finance can provide solutions and
these solutions have to be critical solutions that can be implemented on the
ground. Therefore, in coming up with any solution, it is very important for us
to not only focus on the academic side of the solution, but we need to find a
practical solution that the industry can implement. For example, if an entity
needs to start a business, what are the best products and contracts that can
be explored for us to provide the solution for these people? The solution has to
consider the legal, taxation and regulatory requirements for us to come up with
the best solution.
 IFHUB
Issue 4
December 2022 9

Therefore, to find a solution that is in line

with the current situation, some degree
of innovation is needed by relying on the
different concepts and guidance in Shariah.
As for complying with Shariah, different approaches can be considered. One is by
looking at the classical contracts and instruments, and another is by innovating
new contracts and solutions which are in line with the general guidance of the
Qur’an and Sunnah. As we know, the maxim says that in matters related to
commercial transactions, it is permissible unless there is an indication that says
otherwise.

Therefore, to find a solution that is in line with the current situation, some degree
of innovation is needed by relying on the different concepts and guidance in
Shariah. For example, most of us use our smartphones to make payments for
goods, etc. The tools used are e-wallets which different service providers provide.
Therefore, scholars should find solutions to ensure the wallets are Shariah-
compliant by providing guidance and a framework to use in society. I believe
this kind of solution is the one that is intended by His Royal Highness in his
speech, that is, for us to find a practical solution for the issues that people are
facing.

Q6 Aspiration and vision

What is your aspiration for the future Islamic finance industry in its endeavour
to achieve the true ethos of maqasid al-Shariah?

A6 I am hoping that Islamic finance will be able to provide an inclusive solution

for all levels of society and not only focus on the rich segment so that Islamic
finance will benefit the different segments of society.

My second hope is we can work toward capacity building. One of the important
segments is developing more Shariah scholars who are well-versed in Shariah
and the development of the industry. I hope there will be more interaction
between Shariah scholars, regulators, and practitioners so that we can try to
exchange ideas and views to find a practical solution for the different financial
needs of the society for the banking, capital market and takaful industry.

The third point I would like to emphasise here is that Islam has provided the
solution for each situation we are in; therefore, more research is needed to explore
the different tools available in Islamic finance. I believe more money needs to be
spent for us to nurture research and development in the Islamic finance industry.
We need to depart from the mentality of relying on conventional products and
imitate it in the Islamic finance industry. We need a paradigm change so we
can see Islamic finance as a segment different from conventional and has its
solutions for society.
10 INCEIF Think Tank

MAQASID
AL-SHARIAH
VIS-À-VIS
ISLAMIC AND
GREEN FINANCE
The Malaysian Leadership

INTRODUCTION
Climate change is one of the greatest challenges of our
time. Environmentalists around the world are rallying the By: Dr Noor Suhaida Kasri
Senior Research Fellow
cry for swift responsive actions to halt the devastating ISRA Research
impact of climate change. Fossil fuels, such as coal, oil and Management Centre,
INCEIF University
gas, accounted for more than 75 per cent of all greenhouse
gas (GHG) emissions and almost 90 per cent of all carbon
dioxide emissions, making them the biggest cause of
climate change in the world. To avoid the worst impact of
climate change, environmentalists call for emissions to be
reduced by almost half by 2030 and reach net zero by 2050.

Following these calls, the world’s first universal and legally Hafizzudin Harun
binding global climate change treaty, the Paris Agreement, Trainee
ISRA Research
was adopted in 2015 by 196 countries that are parties to Management Centre,
the United Nations Framework Convention on Climate INCEIF University

Change (UNFCCC). Under the Paris Agreement, the

UNFCC member states that have ratified the Agreement Citation
Kasri, N.S. & Harun, H.
will undertake ambitious efforts to combat climate change (2022), ‘Maqasid al-Shariah
and adapt to its effects. vis-à-vis Islamic and green
finance: the Malaysian
leadership’, IF HUB, Issue 4,
December, pp. 10-16.
 IFHUB
Issue 4
December 2022 11

Thus, the Agreement outlines a global framework to avert climate change by agreeing to a
long-term goal of limiting global warming to below 2 degrees Celsius above pre-industrial
levels and pursuing efforts to limit the increase to 1.5 degrees Celsius.

However, reaching the ambitious mitigation and adaptation goals of the Paris Agreement
requires significant financial resources. The pursuit of efforts towards reaching these goals
echoes the objectives of Shariah (maqasid al-Shariah). According to al-Qaradawi (2022), the
preservation and conservation of the environment are intrinsically embedded in maqasid
al-Shariah, which aims to bring benefit and prevent harm to mankind.

To that end, Islamic finance is a natural medium to fund these efforts globally. Figure 1
illustrates the role Islamic finance can play in funding the preservation and conservation of
the environment.

Eliminate harm (daf’ Preserve the interests Five fundamental necessities

al-mafasid) that can (jalb al-masalih) of (daruriyyat al-khams) under
ruin their lives human well-being the Shariah

Classify activities as
environmentally-sustainable

Greening in Islamic
finance

FINANCING INVESTMENT TAKAFUL

Offers financing that can Approved issuance related Climate risk takaful to help
preserve the environment to green agenda accelerate the recovery
such as solar from natural disasters

ASSESSMENT CRITERIA BASED ON MAQASID AL-SHARIAH

• Key implementation strategies
• Comprehensive measurement
• Impact-Based disclosure

Figure 1: Maqasid al-Shariah and Islamic Finance: Funding Environmental and Sustainable Activities
Source: Adapted from Tajudin (2022)

FOSTERING GREEN FINANCE VIS-À-VIS MAQASID AL-SHARIAH AND ISLAMIC

FINANCE IN MALAYSIA
Malaysia has been at the forefront in positioning maqasid al-Shariah and green finance as
the new frontier of the Islamic finance industry. The Securities Commission Malaysia (SC)
and Bank Negara Malaysia (BNM) have long recognised a dire need for green financing.

Together with the industry stakeholders, these regulators implemented developmental

initiatives to foster the green agenda vis-à-vis maqasid al-Shariah and Islamic finance.
 IFHUB
Issue 4
12 December 2022

1. SECURITIES COMMISSION MALAYSIA

Maqasid al-Shariah and the green agenda have been part of the Securities Commission
(SC) developmental agenda. The SC’s 2019 Sustainable and Responsible Investment (SRI)
Roadmap for the Malaysian Capital Market aims at creating a conducive SRI ecosystem
in Malaysia and funding green initiatives. The SC’s five-year blueprint, the Capital Market
Masterplan 3 (2021–2025), spotlights maqasid al-Shariah as one of the key strategic
development initiatives in fostering and promoting a more SRI initiatives in the Islamic
capital market. Table 1 provides a snapshot of Malaysia’s key achievements in driving SRI
initiatives for the capital market.

2014 • SC launched the SRI Sukuk Framework

• Bursa Malaysia launched the FTSE4Good Bursa Malaysia Index
2015 • Introduction of sustainability reporting under the Bursa Malaysia listing requirements
and Sustainability Reporting Guide

2016 • Tax incentives for SRI sukuk issuers from YA2016 to YA2022

2017 • SC launched the Islamic Fund and Wealth Management Blueprint

• SC issued the Guidelines on SRI Funds
• SC issued the Malaysian Code on Corporate Governance (MCCG) 2017 to enhance the
SRI ecosystem
• Tax incentive for SRI funds for three years from YA2018 to YA2020
• Issuance of the world’s first green sukuk in Malaysia under the SRI Sukuk Framework

2018 • Establishment of the RM6 million Green SRI Sukuk Grant Scheme

2019 • SC launched the SRI Roadmap for the Malaysian Capital Market
• SC and BNM established the Joint Committee on Climate Change (JC3)

2020 • Tax incentives for SRI sukuk and SRI funds issuers extended from YA2021 to YA2023
(Budget 2020)
• The Government approved an additional RM2 billion allocation under the Green
Technology Financing Scheme (GTFS 3.0) until 2022 to encourage the issuance of SRI
Sukuk (Budget 2021)

2021 • SC issued the revised MCCG 2021 which incorporates ESG areas of focus
• SC expanded its Green SRI Sukuk Grant Scheme, and renamed it as the SRI Sukuk and
Bond Grant Scheme
• SC released a public consultation paper on Principles-Based SRI Taxonomy
• SC launched the NaviGate: Capital Market Green Financing Series programme
• The Government issued a RM666 million Sukuk Prihatin
• The Government issued the world’s first sovereign US dollar-denominated
Sustainability Sukuk, via the issuance of USD800 million 10-year trust certificates

Table 1: SRI Initiatives in the Malaysian Capital Market

Source: EY (2022)

Under the SC’s SRI Sukuk Framework, as of December 2021, Malaysia has issued up to
RM10,904 billion worth of SRI sukuk, out of which RM6,729 billion (61.7 per cent) are green
sukuk issuance (see Figure 2).
 IFHUB
Issue 4
December 2022 13

4,500

4,000
3,810
3,500

3,000

2,500
2,682

2,000 2,040
1,500
1,382
1,000
890
500
100
0
2015 2017 2018 2019 2020 2021

Type of SRI Sukuk Total Issuer Total Amount (RM mil)

Social 1 200
Green 15 6,729
Sustainability 9 2,975
Sustainability-Linked 1 1,000
26 10,904

Figure 2: SRI Sukuk Issuance in Malaysia 2015–2021

Source: Siew (2022, pp. 17)

The phenomenal growth of the Malaysian Creating awareness and connectivity

SRI sukuk solidified its leading position between green companies and the
globally. According to Fitch Ratings 2022 capital market are critical in ensuring the
report on Global ESG Sukuk Market, successful implementation of the SC’s
Malaysia houses the largest number of green agenda. In 2021, SC launched the
active ESG sukuk globally as at the end of ‘NaviGate: Capital Market Green Financing
2Q2022, with 175 out of 192 active ESG sukuk Series’ programme, which focused on
instruments reflecting 91.1 per cent of all micro, small and medium enterprises
ESG sukuk issuances. However, most of (MSMEs) and alternative capital market
these ESG sukuk are in MYR-denominated financing avenues available through the
currency, unlike in other core markets. Equity Crowdfunding (ECF) and Peer-
to-Peer (P2P) financing. One hundred
In recognition of its market leadership,
participants and 40 MSMEs from Malaysia’s
the SC was appointed the co-chair of the
green technology and sustainable energy
ASEAN Working Committee on Capital
sectors participated in the programme,
Market Development (WC–CMD) in July
which connected them to the ECF and
2018. The WC–MCD’s work plan includes
P2P financing platforms. Since its launch,
enhancing the role of ASEAN capital
total funds raised through these digital
markets in supporting infrastructure
platforms have reached RM1.3 billion as at
financing, including Islamic financing, as
end-December 2020, benefiting around
well as promoting sustainable financing
3,000 MSMEs.
through collaboration with the ASEAN
Capital Markets Forum.
 IFHUB
Issue 4
14 December 2022

BANK NEGARA MALAYSIA

The alignment of green finance with maqasid al-Shariah is evident in the BNM’s Value-
Based Intermediation (VBI) launched in 2017. The interconnection between maqasid al-
Shariah, VBI and the environment (under the Sustainable Development Goals (SDGs)) is
clearly illustrated in Figure 3.

Promoting Preventing
VBI Maqasid = Well-Being + Harm

Protection Protection Protection Protection Protection

5 Essentials of Religion of Life of Intellect of Lineage of Wealth

TBL People Planet Prosperity

SDG

Figure 3: Tripartite Relationship among VBI & Maqasid, TBL and 15 SDGs
Source: AIBIM (2022, p. 16)

Since its introduction, the VBI-based initiatives have made significant inroads into the Islamic
financial industry through inclusive and sustainable practices, conducts and offerings of
Islamic financial institutions (IFIs). Based on the 2021 VBI Full Report, during the 2020–2021
period, total VBI-related financing reached RM82.6 billion, of which RM7.1 billion (8.6 per
cent) was allocated for green financing and renewable energy (see Figure 4).

Renewable energy 1.5%

Green financing 7.1%
Affordable housing 6.1%
Public infrastructure 4.7%
Figure 4:
Education 4.7% VBI-Related Financing
(2020–2021)
Source: AIBIM (2022, p. 16)
SMEs and micro-SMEs 61.8%
Others 14.1%
 IFHUB
Issue 4
December 2022 15

VBI and green finance continue to be BNM’s developmental agenda. The recent BNM’s
Financial Sector Blueprint (2022–2026) further laid out critical strategies for the financial
sector to continue being the catalyst to drive sustainability through financing VBI, green
and transitioning activities (see Figure 5). By 2026, BNM targeted new financing for green
and transitioning activities to be more than 50 per cent, besides a steady growth in VBI-
aligned assets.

a. Integrate climate-related and environmental risks in

prudential regulation and supervision

e.g. effective implementation of taxonomy, greater alignment with

VBIAF13 and its sectoral guides, strengthened supervisory
expectations and prudential framework on managing climate and
environmental risks, mandatory disclosure of climate risks

4 b. Support orderly transition to a low-carbon economy

e.g. Intensified focus on bridging data gaps, expanded specialised

POSITION THE funding and risk mitigation mechanisms, synergy between national
policies and financial sector initiatives, accelerated capacity building
FINANCIAL SYSTEM TO initiatives on global platforms
FACILITATE AN
ORDERLY TRANSITION c. Integrate climate risks in the Bank's internal functions
TO A GREENER and operations
ECONOMY e.g. climate risk stress test for the financial industry, climate and
environmental risk considerations in the Bank's portfolio
management activities, greater adoption of sustainability in the
Bank's physical operations

13
VBI Financing and Investment Impact Assessment Framework

Figure 5: Greener Economy Strategic Thrust for 2022–2026

Source: BNM (2022, p. 7)

The SC and BNM established the Joint Committee on Climate Change (JC3) in 2019. With
the cooperation of the industry players, JC3 aims to strengthen the capacity of the financial
sector to manage climate-related risks with the following mandates:

JC3’s Mandates
Build capacity Identify issues, Facilitate collaboration Support the financial
through sharing of challenges and between stakeholders sector’s integration of
knowledge, expertise priorities facing in advancing identified solutions
and best practices the financial sector coordinated solutions to address climate
in assessing and in managing the to address arising change or climate-
managing climate- transition towards a challenges and issues related risks in their
related risks low carbon economy business operations

Figure 6: JC3’s Mandates

Source: BNM (n.d.)

Under the JC3, the Climate Change and Principle-based Taxonomy (CCPT) was introduced
in April 2021. The SC and BNM in a joint statement said, ‘The CCPT provides a common
framework for the classification of climate risk-related exposures of financial institutions to
support risk assessments and encourage financial flows towards greening the economy’.
 IFHUB
Issue 4
16 December 2022

BNM’s leadership in the green financing the panacea to bridging the funding gap in
agenda was acknowledged when it led the green finance. Equally important, it reflects
Task Force in publishing a report on the a willing government and market regulators
Roles of ASEAN Central Banks in Managing to lead from the top. The provision of green
Climate and Environment-related Risks. technology incentives such as the Green
This collaborative report from the ASEAN Investment Tax Exemption Allowance
central banks and monetary authorities (GITA) and Green Income Tax Allowance
assesses the implication of climate and (GITE) has helped facilitate the transition
environment-related risks for the region in from a ‘brown’ economy based on fossil
order to take responsive action individually fuels to a sustainable ‘green’ economy.
and collectively. Environmental awareness campaigns
are equally significant in educating
Conclusion
industry players and the community on
The journey of maqasid al-Shariah via the importance of a green economy.
Islamic finance in driving green financing Lastly, as public and private stakeholders’
in Malaysia has provided fruitful lessons. It collaborations on green funding initiatives
has reinforced the relevance of maqasid continue to develop, so will the strategic
al-Shariah in preserving and conserving growth of Islamic finance in the coming
the environment and Islamic finance as years.

References

Al-Qaraḍāwī, Y. (2022), Conservation of the Environment in Islamic Law (Trans.), ISRA Research Management Centre, Kuala Lumpur.

AIBIM (2022), 2021 Value-Based Intermediation Full Report, Association of Islamic Banking and Financial Institutions Malaysia,
Kuala Lumpur.

BNM (n.d.), ‘Preparing our financial sector for risks from climate change’, available at: https://www.bnm.gov.my/climatechange
(accessed 5 November 2022).

BNM (2022), Financial Sector Blueprint 2022–2026, Bank Negara Malaysia, Kuala Lumpur, available at: https://www.bnm.gov.my/
documents/20124/5915429/fsb3_en_book.pdf (accessed 6 November 2022).

EY (2022), ‘Trending: sustainable responsible investment in Malaysia and the region’, available at: https://assets.ey.com/content/
dam/ey-sites/ey-com/en_my/topics/climate-change/ey-trending-sri-in-malaysia-and-the-region-final-22022022.pdf (accessed 8
November 2022).

Fitch Ratings (2022), ‘Global ESG sukuk market issuance: growth likely to continue in core markets; key challenges remain’, available
at: https://cdn.roxhillmedia.com/production/email/attachment/1060001_1070000/8f79a848b4e9e20c57488f37806639d2beb364
bc.pdf (accessed 24 November 2022).

Siew, S.M. (2022), ‘Malaysia’s progress in SRI sukuk a testament of more market-conscious behavior for sustainable investing’,
Islamic Finance News, Vol. 19 No. 23, pp. 17.

SC (2019), ‘Sustainable and responsible investment roadmap for the Malaysian capital market’, available at: https://www.sc.com.my/
resources/publications-and-research/sri-roadmap (accessed 7 November 2022).

SC (n.d.), ‘SC holds inaugural capital market green financing series - widening access to sustainable financing for MSMEs’,
available at: https://www.sc.com.my/resources/media/media-release/sc-holds-inaugural-capital-market-green-financing-series-
widening-access-to-sustainable-financing-for-msmes (accessed 7 November 2022).

Tajudin, R. (2022), ‘Qaraḍāwī’s Islamic green new deal: the pathway for a green and sustainable future’, presented at the Book
Review Forum: Conservation of the Environment in Islamic Law by Dr. Yūsuf al-Qaraḍāwī, 28 October, INCEIF University, Kuala
Lumpur.

UN (n.d.), ‘Climate action’, available at: https://www.un.org/en/climatechange/raising-ambition/renewable-energy (accessed 1

November 2022).

UN (n.d.), ‘The Paris Agreement’, available at: https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement

(accessed 1 November 2022).
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18 INCEIF Think Tank

ISLAMIC FINANCE LAW

AND
REGULATIONS IN MALAYSIA
A MACRO MAQASIDIC APPROACH 1

INTRODUCTION
Islamic banking laws and regulations in
Malaysia have been promulgated to ensure
Shariah compliance, effective internal controls,
adequate capitalisation, good governance and
adoption of best market practices. Operating
in a dual system—Islamic and conventional—
Islamic finance laws and regulations have had
to accommodate both local and international By: Prof. Dr Younes Soualhi
Senior Research Fellow,
banking regimes, especially the prudential ones. ISRA Research Management Centre,
Although Islamic banking law and regulations INCEIF University

have developed quite significantly in Malaysia,

discourse on the relationship between the legal
corpus of Islamic finance and the objectives of
Shariah (maqasid al-Shariah) appears quite
scarce in modern academia.

Despite robust laws and regulations such as the

Assoc. Prof. Dr Said Bouheraoua
Islamic Financial Services Act 2013 (IFSA) and a
Director,
myriad of guidelines and policy documents issued Research Development and Innovation,
ISRA Research Management Centre,
by BNM, critics still maintain that the maqasid INCEIF University
al-Shariah have not been adequately embedded
in the regulatory framework of Islamic finance.

1 This article is a summary of the published ISRA Research Citation

Paper 112/2019, International Shari’ah Research Academy
for Islamic Finance (ISRA), available at https://ifikr.isra.my/ Soualhi, Y. & Bouheraoua, S.
main/view/research-papers/5518 (2022), ‘Islamic finance law and
regulations in Malaysia: a macro
maqasidic approach’, IF HUB,
Issue 4, December, pp. 18-26.
 IFHUB
Issue 4
December 2022 19

The research aims to shed light on the this research classifies them based on two
macro maqasid framework that can be approaches:
used as a reference for framing Islamic
1. Macro maqasid related to the
finance regulations in Malaysia. It also aims
establishment of fundamental prin-
to shed light on the maqasid compliance
ciples of Islamic finance; and
of certain regulations in broad terms.
2. Macro maqasid related to
the establishment of efficient
THE MACRO MAQASID FRAMEWORK implementations of Islamic finance in
FOR ISLAMIC FINANCE real life.
REGULATIONS
In the context of modern Islamic finance, MACRO MAQASID RELATED TO
the regulators are supposed to imbue THE FUNDAMENTALS OF ISLAMIC
maqasid al-Shariah in the acts and
guidelines issued to regulate the Islamic
FINANCE
finance industry. The research argues The macro maqasid related to the
that there cannot be a robust maqasid fundamentals of finance represents the
framework unless it is provided by the epistemological building blocks of Islamic
central bank or monetary authority. The finance. They are the prerequisite for
‘top-down’ approach in first realising the consideration of the macro maqasid
macro maqasid would be automatically related to the efficient implementations of
reflected in the operations of the IFIs Islamic finance in the real economy. They
(micro maqasid). The latter are supposed also represent a theoretical framework
to realise the Shariah objectives of justice, to prevent the exercise of ijtihad outside
wealth circulation, transparency, true of its legitimate scope and context when
transfer of ownership, true acquisition of enacting laws and regulations in Islamic
assets, shunning of legal stratagems (hiyal), finance.
reduction of private debt, and financial
inclusion. Three selected main macro maqasid related
to the establishment of the fundamentals
The macro maqasid can be classified of Islamic finance are depicted in Figure 1.
based on different considerations; however,

Consideration of the explicit

ruling of the Islamic legal text
Consideration of Justice and 1 Adherence to the explicit
injunctions and prohibitions
Fairness in a Contractual of the Islamic legal texts.
Relationship
The agreement constitutes the
law between the contracting
parties and cannot be amended
3
unless it is agreed by both
parties. This is to ensure fairness
Consideration of a contract’s
in the contractual relationship.
objective and implications
2 The contracts should be
consistent with the aims and
implications that the Lawgiver
intended to realize by them.
Figure 1: Macro Maqasid in Islamic Finance
 IFHUB
Issue 4
20 December 2022

MACRO OBJECTIVES RELATED TO and their destiny is free from external

influence. The Shariah tends to secure
EFFICIENT IMPLEMENTATIONS the independence of the ummah that
goes along its superiority over other
The followings are the macro maqasid
nations as the Qurʾan has confirmed.
for efficient implementation that should
Imam Mawardi (n.d.) states that one
be adopted to evaluate any regulation of
of the functions of the Muslim ruler is
Islamic finance in Malaysia.
to provide his people with experts and
1. Development of the Real Economy manufacturers in order to be sufficient
and independent from others. In modern
The economy is of two types, financial
banking practices, excessive leveraging
and real. The real economy is related
coupled with external sovereign debt
to real assets and resources that fulfil
means total submission to the lenders’
human needs in a direct way, such as
terms and conditions such as decreasing
the consumption of goods. On the other
subsidies and laying off workers.
hand, the financial economy is related
to financial assets such as Islamic bonds, 3. Efficient Regulatory Regime
equities and rights (Khadirat, 2012).
The efficiency policies governing the
From the Shariah perspective, scholars
Islamic financial sector require the
of Islamic public policy (al-siyasah al-
harmonious operation of three main
sharʿiyyah) maintain that the ruler
frameworks: the Shariah framework,
must pursue an economic agenda that
the legal framework and the overall
tends to build up and develop cities
economic and market framework. The
and nations. Enumerating the main
Shariah framework necessitates the
duties of a ruler, Imam Mawardi (1979)
establishment of the Shariah advisory
mentioned that development of cities
function at the level of the regulators
(ʿimarat al-buldan) is an important
and the Islamic financial institutions. It
duty that should result in the protection
also requires the setting up of Shariah
of people’s interests. Ibn Khaldun (2004)
governance mechanisms and remedial
reiterated this macro objective; i.e.,
systems for Shariah non-compliant
the development of the real economy,
events. All these are complementary
when describing a state after it has
maqasid that will be achieved as a result.
been successfully established. The
essential dimensions of this macro As for the legal and regulatory
objective include mobilising wealth, framework, the Islamic finance industry
controlling revenue, keeping records of is governed by the law of the land
public expenditure, building factories, and a set of statutory guidelines in a
developing sufficient housing and dual banking system. The prudential
vast cities with high structures, and regulations such as those related to
forming strong armies that are feared by liquidity and capital adequacy are
enemies. applicable to both conventional and
Islamic financial institutions. However,
2. Financial Independence
regulatory Shariah resolutions are only
Financial independence refers to the applicable to IFIs and Islamic windows.
ability of a country to provide sufficient For an efficient legal framework,
resources for its people so that their harmonisation between conventional
interests and the interests of their law and Shariah must be pursued.
sovereign governments are protected,
 IFHUB
Issue 4
December 2022 21

Debt in fiscal policy is supposed to be

managed in a way that does not affect
economic stability.

4. Reduction of Debt (Private and Public) ultimately lead to monetary stability,

hence the realisation of a macro
Debt in fiscal policy is supposed to be
objective. From a maqasid perspective,
managed in a way that does not affect
the above instruments are the means
economic stability. Looking at debt-
(wasaʾil) meant to achieve a particular
based contracts from the economic
objective of the Shariah. From a
perspective, many Muslim economists
maqasid perspective, the means holds
have noticed that Islamic banking and
the same ruling as the objective, as will
finance (regulations included) have
be highlighted in the last section of this
not achieved the maqasid al-Shariah article. Thus, all regulations pertaining
of wealth identified by scholars such to those instruments are intended
as Ibn ʿAshur. These include justice by Shariah and are part of the macro
(ʿadl), wealth circulation (rawaj), maqasid under discussion; i.e., monetary
transparency (wuduh), stability (thabat) stability.
and protection (hifz).
The main issue that has yet to trigger is
Suwailem (2009) pointed out that debt the role of a Shariah-compliant central
reduction is one of the maqasid al- bank in realising maqasid al-Shariah
Shariah championed by Ibn Qayyim in the financial system. Most central
al-Jawziyyah. He also reiterated that an banks are Shariah non-compliant in
Islamic financial product must be both terms of assets and operations as they
Shariah-compliant and economically deal extensively with riba. They have
viable. Some Muslim economists also provided an environment where
enumerated the alarming effects of rise conventional and Islamic financial
of debt in any economic system. They systems converge rather than diverge.
include the risk of bankruptcy, volatility
in revenues, rise of delinquency rates, 6. Financial Stability
inflation and high public expenditure Financial policy generally aims at
(al-Zarqa, 2012). This situation may optimising resources in terms of
be aggravated by the mechanism of balanced wealth mobilisation and
fractional reserve, which creates money allocation. This would ensure economic
from thin air, hence deepening the debt stability and fair distribution of resources
problem. Lending a multiple of deposits and income (Salhi, 2010). For central
is also the norm of Islamic banks. bankers, financial stability ‘describes
the condition where the financial
5. Monetary Stability
intermediation process functions
The central banks are entrusted to smoothly and there is confidence in the
design, implement and monitor the operation of key financial institutions
monetary system and work constantly and markets within the economy’ (BNM,
for its stability. These functions would n.d.).
 IFHUB
Issue 4
22 December 2022

Financial stability is one of the macro outcome of Shariah in Islamic finance—

maqasid of an Islamic financial system. justice, wealth preservation and wealth
In classical jurisprudence, the Muslim circulation. This initiative undoubtedly
ruler is free to administer the resources needs a considerable deal of alignment
of the land based on public interest with the existing regulations, if not
(maslahah mursalah). This falls under new ones. It constitutes a paradigm
the Islamic legal maxim ‘Acts of those shift in the world of Islamic finance; the
with authority over people must take discourse on maqasid al-Shariah in
into account the interests of people’ finance is now an important agenda of
(Suyuti, 1990). According to Imam al- the regulators and is no longer confined
Mawardi, rule of a nation is based on to Shariah scholars and fatwa authorities.
four principles: physical development,
guarding people, administering the
army, and putting in place a fair financial THE OVERALL ENVIRONMENT OF
policy (taqdir al-amwal). In elaborating ISLAMIC FINANCE REGULATIONS IN
the latter, al-Mawardi (n.d.) maintains MALAYSIA
that if the financial policy is truly fair,
nations become stable. In Malaysia, the regulatory and supervisory
authority is represented by Bank Negara
7. Value-Based Intermediation (VBI) Malaysia (BNM) as enshrined in the Islamic
The Central Bank of Malaysia launched Financial Services Act 2013 (IFSA), the
an initiative to imbue Islamic finance primary legislation for Islamic banking
practices and activities with socio- in Malaysia. Under the purview of IFSA,
economic impact elements within the BNM is established as the only regulator
framework of maqasid al-Shariah. VBI mandated to ensure Shariah compliance of
introduced by BNM aims to achieve Islamic banks businesses and operations.
the intended outcomes of Shariah in BNM also provides the legal ground for the
promoting good and preventing harm codification of the resolutions issued by the
(BNM 2017). Three major maqasid Shariah Advisory Council (SAC) and pursues
have been identified as the intended punitive measures for breaches punishable
under IFSA.
 IFHUB
Issue 4
December 2022 23

Regulators and Regulations as Means The Conceptual Framework of Islamic

(Wasaʾil) to Achieve Higher Ends (Macro Finance Regulations in Malaysia
Maqasid)
Regulations of Islamic finance have been
The doctrine of wasaʾil is part of the theory discussed by some eminent Muslim
of maqasid al-Shariah as propounded by economists. Chapra and Khan (2000) are
Muslim jurists. Ibn ʿAshur (2011) highlighted of the view that there are four reasons for
that ‘wasaʾil are the means leading to the development of a deep and dynamic
maqasid. The means to the best maqsad is financial market, regulating Islamic finance
the best means, and the means to the worst institutions: systemic considerations, the
maqsad is the worst means’. The means protection of depositors, compliance with
are also Shariah rules that are meant to Shariah, and the integration of Islamic
preserve the higher objectives of Shariah; finance in the international financial
so much so that the pursuit of maqasid is system. In another study, Chapra (1995)
also the pursuit of their means (wasaʾil). identified human well-being as the ultimate
objective of the Shariah. To him, wealth is
In the context of finance, some of the
only a ‘means, though an important and
means of preserving wealth are stated
indispensable one, for realising human
in the Shariah sources while others
well-being’. This theoretical element is
are formulated by people in charge of
well substantiated in the classical theory
wealth, be it individual or public wealth.
of maqasid al-Shariah propounded by al-
In the banking context, the regulators
Juwayni, al-Ghazali and al-Shatibi, and in
are the ones that must issue regulations
modern scholars such as Ibn ʿAshur.
pertaining to the wealth of the nation.
Therefore, the regulators are the means In any banking system, the central bank’s
(wasilah) to the preservation of wealth (hifz agenda is to strive to realise objectives
al-mal). Regulations of Islamic banking such asstability of the monetary, financial
are the means that are supposed to realise and payment systems (BNM, 2018). These
maqasid al-Shariah. From the Shariah are very much in line with the maqasid
perspective, the ruler is allowed to come up al-Shariah regarding wealth. While the
with any regulations (wasilah) to safeguard Central Bank of Malaysia Act 2009 (section
the interests of the ruled. 27) reiterated that Malaysia has a dual
banking system, it empowered SAC-BNM
All these are captured in the policy
by requesting the court and the arbitrators
documents published by BNM. For example,
to refer to SAC-BNM (section 56 (1)) and
the Murabahah Policy Document states:
by considering the rulings of SAC-BNM
‘Murabahah is a sale and purchase contract
binding on IFIs, courts and arbitrators
which is binding in nature. Thus, the
(section 57).
contract shall not be terminated unilaterally
by any of the contracting parties.’ Looking
into the nature of regulations, they can be
considered as wasaʾil meant to protect
wealth (hifz al-mal), facilitate its circulation
(rawaj), ensure its fair mobilisation and
allocation (ʿadalah), and realise its stability
(thabat) by determining the roles and
responsibilities of all stakeholders.
 IFHUB
Issue 4
24 December 2022

Despite the dual banking system in

Malaysia, many civil laws seem to have
a status that overrides the Islamic
banking practices.
The conceptual framework of Islamic The Obstacle of Subordinating Islamic
finance regulations in Malaysia is generally Banking Regulations to Conventional
highlighted in IFSA, which promotes Regulations
financial stability and compliance with
Zulkhibri and Ghazal (2015) investigated
the Shariah. In achieving these objectives,
regulations of Islamic banking in 13
section 6 of IFSA specifies that:
countries (Muslim and non-Muslim) and
6. The principal regulatory objectives concluded that the relevant regulations
of this Act are to promote financial in most of those countries are formulated
stability and compliance with Shariah in the image of the conventional banking
and in pursuing these objectives, the system. In Malaysia, although the Islamic
Bank shall— finance regulation (Islamic Banking Act
1983) was repealed and substituted by IFSA,
(a) foster:
the outcome of the research seems to imply
(i) the safety and soundness of that the dual banking system in Malaysia
Islamic financial institutions; is featured by adopting both domestic
(ii) the integrity and orderly reporting and international standards.
functioning of the Islamic
Despite the dual banking system in
money market and Islamic
Malaysia, many civil laws seem to have a
foreign exchange market;
status that overrides the Islamic banking
(iii) safe, efficient and reliable
practices (e.g., Hire-Purchase Act 1967), a
payment systems and Islamic
factor that could prevent the realisation of
payment instruments; and
maqasid al-Shariah in Islamic finance. To
(iv) fair, responsible and professional mitigate this legal risk, efforts to harmonise
business conduct of Islamic civil law with Islamic law culminated in the
financial institutions; and establishment of the Law Harmonization
(b) strive to protect the rights and Committee under Bank Negara Malaysia
interests of consumers of Islamic with the mandate of realising legal certainty
financial services and products. and removing impediments to the efficient
conduct of Islamic finance.
The objectives referred to in this section
are in line with maqasid al-Shariah. The
section mentions financial stability, which SELECTED ISLAMIC FINANCE
aims at wealth protection (hifz almal),
Shariah compliance (hifz al-din), fairness
REGULATIONS UNDER SCRUTINY
(ʿadalah), and consumer protection (hifz Table 1 briefly scrutinises some regulations
al-nafs wa al-mal). of Islamic finance in Malaysia and assesses
in broad terms their compliance with
maqasid al-Shariah.
 IFHUB
Issue 4
December 2022 25

Table 1: Assessment of the Implementation of Maqasid al-Shariah Towards Selected

Regulation of Islamic Finance in Malaysia

Focus Area Assessment

Governance • The Shariah Governance Framework (SGF) provided the necessary

Framework wasaʾil to realise maqasid al-Shariah.
• By establishing a robust governance structure featuring audit,
management, review and research, and by strengthening the lines
of reporting to avoid conflict of interest, SGF has ably strengthened
compliance with the Shariah and its maqasid.

Prudential and • Consider the prudential and regulation are Shariah compliant in principle
Risk Management as they are technical in nature and, hence, compliant with maqasid
Regulations unless proven otherwise.
• The capital adequacy ratio (CAR) and liquidity ratio are necessary wasaʾil
to protect the IFI from deficiency or bankruptcy.
• Potential maqasid-compliance issues:
- Issues of tanazul by sukuk holders may raise maqasid-compliance
issues in relation to justice and fairness.
- Recourse to the obligor instead of the asset in asset-based sukuk would
raise an issue as to whether such a practice is in line with the objective
of supporting the real economy.

Market Conduct • Contain a number of precautionary measures aimed at keeping the

and Consumer consumer safe from any misleading or deceptive information.
Protection • Regulations on digital assets are still lagging behind as the regulator is
Regulations still in public consultation with the relevant parties to regulate initial coin
offerings (ICOs).

Financial • Regulatory efforts are being made to promulgate regulations for Islamic
Technology fintech to control and supervise the rapid growth of fintech start-up
(Fintech) companies.
Regulations • Fintech Regulatory Sandbox Framework—BNM has laid down detailed
provisions for sandbox participants, including the protection of the
confidentiality of customer’s information.
• Consumer protection remains a big concern with regard to initial coin
offerings (ICO) whereby investors may be exposed to potential risks
such as fraud, money laundering, hacking and theft of online personal
information. These are all risks to wealth—undermining the Shariah
objective of hifz al-mal.

Malaysian Shariah • Represent the regulatory references for Shariah compliance of products
Standards (Policy and services offered by Islamic banking and finance.
Documents) • The standards encapsulate one of the most accurate, comprehensive,
and SAC-BNM and practical ijtihad exercises in the modern world, realising Shariah
Resolutions and maqasid compliance and enhanced with operational procedures
reflecting the best practices in the market.
• Some differences are noted between the Malaysian Shariah standards
and those of AAOIFI. Although the above issues are Shariah compliant
as per the requirements of ijtihad, some have criticised them as being
Shariah non-compliant and far from maqasid al-Shariah.
 IFHUB
Issue 4
26 December 2022

CONCLUSION
Islamic banking regulations in Malaysia This is purportedly one of the main obstacles
have developed considerably over time and to realising the macro maqasid. However,
demonstrate a great deal of robustness. the major criticism levelled against the
Despite their sophistication, the said Malaysian regulations has been addressed
regulations are yet to completely reflect toward the resolutions of the SAC-BNM,
the macro maqasid of Shariah such as which form one of the bases for the Shariah
financial independence, financial stability Standards published by BNM from 2015 to
and value-based intermediation. This 2018. The Standards are largely in conformity
research has specifically emphasised the with GCC regulations and AAOIFI Shariah
macro maqasid for two reasons: Standards; however, they contain certain
controversial issues that have divided the
1. The realisation of macro maqasid at the
Malaysian and GCC markets in terms of
level of the regulators would facilitate
Shariah compliance. These include the
the realisation of micro maqasid at the
sale of debt, organised tawarruq and
level of Islamic financial institutions.
dual agency. For macro maqasid to reign
2. The use of macro maqasid as the supreme in the regulatory framework
benchmark to measure compliance of Malaysia, the research recommends
with the Islamic finance regulations propounding a specific theory of maqasid
in Malaysia with the objectives of the using the macro maqasid discussed in this
Shariah is paramount. research and capitalising on the existing
VBI initiative, which is micro-oriented. With
The Malaysian regulations on Islamic macro and micro maqasid, the Malaysian
finance operate within the conventional experience in Islamic finance regulations
regulatory and financial environment. will be ushered to greater heights.

REFERENCE

Al-Mawardi (1979), Adab al-Dunya wa al-Din, Dar Ihyaʾ al-Turath al-ʿArabi, Beirut.

Al-Mawardi, A.H. (n.d.), Tashil al-Nazar wa Taʿjil al-Zafar fi Akhlaq al-Mulk, Dar al-Nahdah al-ʿArabiyyah, Beirut.

Al-Zarqa, A. (2012), Al-Azmah al-Maliyyah al-ʿAlamiyyah, al-Madyuniyyah al-Mufriṭah Sababan wa al-Tamwil al-Islami Badilan, al-
Azmah al-Iqtisadiyyah al-ʿAlamiyyah al-Muʿasirah min ManZur Islami, International Institute of Islamic Thought, Herndon.

BNM (2017), Value-based Intermediation: Strengthening the Roles and Impact of Islamic Finance, Bank Negara Malaysia, Kuala
Lumpur.

BNM (2018), Implementation Guide for Value-based Intermediation, Bank Negara Malaysia, Kuala Lumpur.

Chapra, M.U. & Khan, T. (2000), Regulation and Supervision of Islamic Banks, IRTI, Jeddah.

Chapra, M.U. (1995), Islamic and the Economic Challenge, International Institute of Islamic Thought, Herndon.

Ibn Khaldun, A.A. (2004), al-Muqadimmah, Dar al-Balkhi, Dasmascus.

Khadirat, U. (2012), ‘Al-azmah al-iqtisadiyyah al-ʿalamiyyah al-muʿasirah wa masir al-nizam al-raʾsumali’, in al-Azmah al-
Iqtisadiyyah al-ʿAlamiyyah al-Muʿasirah min Manzur Islami, International Institute of Islamic Thought, Herndon.

Salhi, S. (2010), Al-Siyasah al-Naqdiyyah wa al-Maliyyah f i Iṭar Nizam al-Musharakah fi al-Iqṭisad al-Islami, Dar al-Wafaʾ, Cairo.

Suwailem, S. (2009), Qadaya f i al-Iqtisad wa al-Tamwil al-Islami, Dar Kunuz Ishbilya, Riyadh.

Suyuṭi, J.D. (1990), Al-Ashbah wa al-Nazaʾir, Dar al-Kutub al-ʿIlmiyyah, (n.p.).

Zulkhibri, M. & Ghazal, R. (2015), Development of Islamic Banking Regulation in Selected IDB Member Countries: A Comparative
Analysis, IRTI, Jeddah.
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28 Practitioner's Insights

DIGITAL FINANCE
AND
MAQASID
AL-SHARIAH
INTRODUCTION
Islamic finance is among the fastest growing
segments of financial services relatively due
to its nature of promoting fairness in providing
services as well as its close association with
By: Ahmad Hamzah
ethical finance in a broader term. The Shariah, Bin Mat Daud
in all its rulings enacted by the Lawgiver Head,
Shariah Division,
is either to secure benefit (maslahah) or MBSB Bank Berhad
prevent harm (mafsadah) (Laldin et al., 2018).
The recent COVID-19 worldwide pandemic
has tested the principles of maslahah and
mafsadah, which are the cornerstone of the
objectives of Shariah (maqasid al-Shariah).
The pandemic has also altered the traditional
way we conduct our day-to-day business and
Hakimi Bin Mat Salim
financial transactions. With business premises
Senior Executive,
closed due to the harms posed by COVID-19, Shariah Division,
MBSB Bank Berhad
the adoption of digitalisation experienced
unprecedented growth to help minimise the Citation:
pandemic’s adverse impact on our daily lives. Daud, A.H.M. & Salim, H.M.
(2022), ‘Digital finance and
maqasid al-Shariah’, IF
HUB, Issue 4, December,
pp. 28-33.
 IFHUB
Issue 4
December 2022 29

The rapid growth of digital finance and modes such as cash, debit and credit cards
its wide acceptance amongst consumers were substituted by digital payments as a
made it necessary for an Islamic financial more convenient and safe payment model.
institution (IFI) to assess its conceptual,
Digital finance, which supplements all
Shariah, regulatory and operational
segments of financial technology (fintech),
framework. This article attempts to
includes a wide range of financial services
measure digital finance in light of maqasid
such as savings, investment, financing,
al-Shariah, an essential tool in Islamic
payments, credit, remittance and insurance
jurisprudence in determining the preferred
accessed and delivered through digital
opinion (tarjih). Applying the elements
channels. Muneeza (2022) believes that
of the maqasid al-Shariah in all aspects
digital finance is the product of fintech that
of life can promote positive values as
encompasses the use of computer software
recommended by the teachings of Islam
and other related technologies to provide
(Noor et al., 2016).
support and enable financial services by
banks and non-bank financial institutions.
DIGITAL FINANCE Technology is the key to using mobile and
cloud computing, internet ecosystems and
Digital finance is the transmission of other platforms for financial services.
traditional financial services into a
digital platform through devices such as As a conceptual framework for reviewing
computers, tablets and smartphones. It has the field of digital finance, Gomber et al.
the potential to provide financial services (2017) introduced the Digital Finance Cube
to underserved segments in areas where which incorporates three key aspects of
physical infrastructure is lacking. The year digital finance and fintech, namely the
2020 marked the beginning of a digital institutions, technologies and concepts
economic boom when digital finance and and business functions (see Figure 1).
cashless payments took over the normal This conceptualisation facilitates the
modes of financial transactions. Traditional orientation of academics and practitioners
financial activities such as financing were in the field of digital finance and permits
overshadowed by crowdfunding, digital the structuring of academic research in
financing and even universal payment relation to one another.

Digital Finance Technologies

and Technological Concepts
s
nction
Businal Finance
ess Fu
Digit

Figure 1:
The Digital Finance
Cube and Its
Dimensions
Source: Gomber et al. (2017)

s
nce Institution
Digital Fina
 IFHUB
Issue 4
30 December 2022

To address the needs of society for principles will result in more fraud and
continuous financial services, IFIs have exploitation among people.
taken the necessary steps for digitalisation,
The knowledge of maqasid al-Shariah is
indirectly satisfying the maqasid al-Shariah
principles. As a result, market participants very important for mujtahid, as they need
can meet the demands of customers who to understand or interpret Shariah texts
have embraced these new channels while and provide solutions to contemporary
at the same time gaining an advantage problems faced by Muslims (Ibn ‘Ashur,
over competitors while closing the service 2006).
gap, especially with underserved clients.
According to Imam al-Shatibi (2004), human
As much as digitalisation is welcomed in interests, which are the top priorities of the
the industry, it is not without its unique Shariah, are divided into three hierarchichal
challenges. For IFIs, there are additional categories (refer also to Figure 2):
Shariah requirements to be observed.
1. Necessities (daruriyyat): Things that
Because of that, industry players must
emphasise the workflow, systems, laws and human beings need and cannot live
regulations to manage the risks presented without, i.e., religion, life, intellect,
by the new digital means. progeny and wealth.

2. Needs (hajiyyat): Human needs

MAQASID AL-SHARIAH that make their lives run easily and

smoothly, without which life will be full
According to Imam al-Ghazali (2008), of difficulties, e.g., the need for buying,
the purpose or objective of Shariah is to renting and rukhsah.
promote well-being for all humanity in
order to maintain religion (din), life (nafs), 3. Embellishments (tahsiniyyat):
intellect (‘aql), progeny or lineage (nasl) Complementary needs that make
and wealth (mal). Observing these five human life happier and more
principles will maintain public interest, and comfortable, e.g., wearing clothes with
it is obligatory. Negligence of any of these various colours and using luxury vehicles.

Embellishments
(Tahsiniyyat)

Needs
(Hajiyyat)

Necessities
(Daruriyyat)

Preservation and �Religion (Din) �Progeny (Nasl)

protection of: �Life (Nafs) �Wealth (Mal)
�Intellect (‘Aql)

Figure 2: The classification of maslahah and five items of basic needs

Source: Authors’ own
 IFHUB
Issue 4
December 2022 31

IMPORTANT PRINCIPLES FOR

DIGITAL FINANCE IN CONFORMITY
TO MAQASID AL-SHARIAH
The degree of importance of digital finance Nonetheless, no matter how we categorise
varies from one aspect to another; hence and assign the level of maqasid al-Shariah
attempting to classify it into a single to digital finance, we all could agree that its
category of maqasid al-Shariah may not impacts have transcended way beyond the
be plausible. For instance, the use of the imaginable. It has recorded tremendous
digital channel in Klang Valley, where growth in the past two to three years to
other means of financial transactions are address the necessity of life in the face
in abundance, may fall under tahsiniyyat, of adversities. According to the Malaysia
but for people in rural areas where physical FinTech Report 2021, mobile banking
branches are few and far between, it is transactions surged more than double to
one of the hajiyyat. And if we apply other RM460 billion in 2020 compared to RM200
situations in which digital access equals life billion in 2019. On the other hand, E-money
and death, especially in countries deep in transactions reached RM29 billion in 2020
hyperinflation like Lebanon (Sigalos, 2022), representing 61 per cent growth compared
it may well be considered daruriyyat. to the previous year (Fintech News Malaysia,
2021), as illustrated in Figures 3 and 4,
respectively.

500
125%
400
MYR Billion

300

200 104%
100
98% Figure 3:
40% Mobile Banking Transaction
64% Value and Growth Rate
0
2016 2017 2018 2019 2020 Source: Fintech News Malaysia (2021)

100

80
MYR Billion

60

40
61%
20 Figure 4:
66%
28% 18% 21% E-money Transaction Value
0 and Growth Rate
2016 2017 2018 2019 2020 Source: Fintech News Malaysia (2021)
 IFHUB
Issue 4
32 December 2022

In addition, al-Qaradaghi (2022) underlined • Principle 11: The principle of applying

11 key principles to ensure that digital the science of balance (fiqh al-mizan) to
finance is conducted in accordance with all the previous principles.
maqasid al-Shariah:

• Principle 1: The principle of adherence IMPLEMENTATION OF MAQASID IN

and consistency with the provisions of
the Shariah.
DIGITAL FINANCE
It is essential for IFIs to go digital since the
• Principle 2: The principle of continuity in
public now has easy and wide access to
linking the activities of IFIs to the system
all products and services offered without
of maqasid, including the objectives of
being restricted by time or location. The
public (‘ammah), private (khassah) and
development of Malaysian digital finance
particular (juz’iyyah), which are linked to
has positively affected the technological
each contract.
innovation of Islamic finance. These days, it
• Principle 3: The principle of intention is easy for users in Malaysia to obtain digital
to benefit people (jalb al-masalih) services for Islamic financing, investment,
and to prevent people from harm (daf’ saving and many more. Furthermore, the
al-mafasid) in each contract, with products and services offered by the IFIs
taking care of the jurisprudence of match the requirements and preferences
consequences (fiqh al-ma’alat) and sad specified in maqasid al-Shariah.
al-dhara’i’.
We can cite a number of instances where
• Principle 4: The principle of adherence maqasid is applied in Malaysian digital
to disciplines of ijtihad to address the finance. The most notable instance is in
developments of contemporary financial the financing facilities, where numerous
developments and related issues. forms of Islamic financing, including but
not limited to education, housing, wedding
• Principle 5: The principle of justice on
and others, may now be applied and
which all Islamic laws are based.
administered using digital technology.
• Principle 6: The principle of preserving In addition, the current digital platforms
the existence of Shariah contracts, their introduced by Malaysian IFIs also offer
original pillars and effects, dependency several services for the payment of zakat
and what affects their validity in terms and hajj savings, two of Islam’s pillars,
of will defects, impediments, corrupt allowing users to pay and manage their
conditions, etc. transactions seamlessly and conveniently.

• Principle 7: The principle of effective risk Notwithstanding the abovementioned

management and prevention. initiatives, the launch and wide acceptance
of digital payment via e-wallet platform and
• Principle 8: The principle of monitoring, the establishment of Buy Now Pay Later in
reviewing and auditing. Malaysia have further accelerated Shariah-
based digital financing development. Table
• Principle 9: The principle of continuous
1 highlights some examples of the digital
development and improvement.
products and initiatives that have been or
• Principle 10: The principle of applying may be introduced by IFIs in Malaysia, and
governance at all levels and grounds. they can be regarding fulfilling maqasid
al-Shariah:
 IFHUB
Issue 4
December 2022 33

Table 1: Products and Initiatives of Malaysian IFIs in Digital Finance

Maslahah Category Features

• Zakat and waqf digital payment

Religion
• Pilgrimage digital savings

Life • Family and health digital takaful

• Education digital savings and financing

Daruriyyat Intellect
• Education digital takaful

Progeny • Marriage digital savings and financing

• Digital investment, i.e., mutual funds, stocks

Wealth
• Digital takaful protection for properties

• E-wallet, Buy Now Pay Later, DuitNow and QR

Hajiyyat Wealth transaction
• Digital mortgage and hire purchase

Tahsiniyyat Wealth • Digital savings and financing for travelling purposes

Conclusion

Digital finance is crucial in today’s day-to- digitalisation due to the rapid development
day transactions and businesses, and it of technology, and this could encourage
is believed that it will replace traditional more users to embrace Islamic finance in
finance in promoting fairness and its truer sense under maqasid al-Shariah
democratising financial services. The use principles. To conclude, the Shariah always
of digital finance provides accessibility, aims to provide benefits to mankind and
continuity and trust to customers as long to avoid oneself from harm. Thus, digital
as it adheres to the proper guidelines and finance guided by Shariah will ensure that
rules. IFIs should continue to innovate all party’s universal well-being and welfare
their products and services towards are taken care of.

References

Al-Qaradaghi, A.M. (2022), Al-Mabadi’ al-Muassisah li Al-Tamwil al-Raqmi wa al-Syumul al-Mali, International Shariah Scholars
Forum (ISSF 2022).

Fintech News Malaysia (2021), ‘Fintech Malaysia report 2021 – Fintech reaches an inflection point in Malaysia’, available at: https://
fintechnews.my/27070/malaysia/fintech-malaysia-report-2021/

Gomber, P., Koch, J.-A. & Siering, M. (2017), ‘Digital finance and fintech: current research and future research directions’, Journal of
Business Economics, pp. 537–580.

Imam Al-Shatibi, I.M. (2004), Al-Muwafaqat fi Usul al-Shariah, Dar al-Kutub al-Ilmiah.

Imam Ghazali, A. (2008), Al-Mustasfa min Ilm al-Usul, Syarikat al-Madinah al-Munawwarah li al-Thiba’ah.

Laldin, M.A., Bouheraoua, S., Ansary, R., Khir, M.F.A., Ali, M.M. & Mustafa, M.M. (2018), Islamic Legal Maxims & Their Application in
Islamic Finance, International Shariah Research Academy for Islamic Finance (ISRA), Kuala Lumpur.

Muneeza, A. (2022), ‘Legal and regulatory framework for digital finance and financial inclusion’, International Shariah Scholars
Forum (ISSF 2022), available at: https://doi.org/10.1016/j.bir.2017.12.003

Noor, A.M., Kamarudin, A.A., & Haron, M.N. (2016), ‘The Importance of Understanding the Maqasid of Shariah in the development of
Islamic banking and the financial system’, Al-Shajarah: Journal of the International Institute of Islamic Thought and Civilization
(ISTAC), pp. 41–45.

Sigalos, M. (2022), ‘In bankrupt Lebanon, locals mine bitcoin and buy groceries with tether, as $1 is now worth 15 cents’, available at:
https://www.cnbc.com/2022/11/05/-in-bankrupt-lebanon-locals-mine-bitcoin-and-buy-groceries-with-tether.html
ISRA INTERNATIONAL
JOURNAL OF ISLAMIC
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36 News @ INCEIF

INCEIF UNIVERSITY APPOINTS

BNM GOVERNOR, TAN
SRI NOR SHAMSIAH
MOHD YUNUS
AS CHANCELLOR
SHARIAH SCHOLAR, TAN SRI
MOHD DAUD BAKAR
AS PRO-CHANCELLOR

KUALA LUMPUR, 20 October 2022 – INCEIF takes this opportunity to thank Tan
INCEIF University today announced the Sri Dr Zeti for her invaluable contributions
appointment of Bank Negara Malaysia and stewardship since INCEIF was
(BNM) Governor Tan Sri Nor Shamsiah established.
Mohd Yunus as the Chancellor of INCEIF
Her leadership and guidance have
University and Tan Sri Dr Mohd Daud Bakar
contributed to INCEIF’s growth and
as the Pro-Chancellor.
progress on many levels, particularly on
Tan Sri Nor Shamisah will succeed Tan Sri the international financial and regulatory
Dr Zeti Akhtar Aziz, who served as the first landscape.
Chancellor since 2009.
 IFHUB
Issue 4
December 2022 37

The appointments of both luminaries further

strengthen INCEIF’s continued strategic aims
and role in developing talent and embarking on
applied research and training to become the
knowledge and thought leader in Islamic finance.
Tan Sri Nor Shamsiah assumed office as first Shariah standard on gold issued by
Governor of BNM on 1 July 2018. As Governor, the Accounting and Auditing Organization
she chairs BNM’s Board of Directors as well for Islamic Financial Institutions. He has
as the Monetary Policy Committee and the written more than 40 books in various
Financial Stability Executive Committee. genres that shed light on modern scholars’
She is also a Council Member of the Islamic interpretation of Shariah rulings and their
Financial Services Board and a Member of practical application in the Islamic finance
the Governing Board of the International industry.
Islamic Liquidity Management Corporation.
The appointments of both luminaries
Pro-Chancellor Tan Sri Daud currently further strengthen INCEIF’s continued
serves as Chairman of the Shariah Advisory strategic aims and role in developing talent
Council of Bank Negara Malaysia and the and embarking on applied research and
Securities Commission Malaysia. He is also training to become the knowledge and
a Shariah board member of international thought leader in Islamic finance. In a time
financial institutions and organisations of rapid change and challenges in higher
such as Amundi Asset Management education, amidst a world looking to be
(France), Bank of London and the Middle more inclusive, resilient and sustainable,
East, Dow Jones Islamic Market Index (New INCEIF is set to benefit from their combined
York), Morgan Stanley (Dubai) and Sedco wealth of experience in policymaking,
Capital (Saudi Arabia). finance and Shariah insights.

A respected Shariah scholar, author and As the only full-fledged Islamic finance
entrepreneur, Tan Sri Daud was recently university with full accreditation from
bestowed the Royal Award for Islamic AACSB International, a global association
Finance 2022 by His Majesty the Yang di- providing quality assurance to more than
Pertuan Agong for his prominent role in 900 accredited business schools worldwide,
shaping the global Islamic finance industry INCEIF is well-positioned to nurture talent
and advancing Shariah thought leadership. to meet the industry’s need as a premier
He was instrumental in developing the institution of higher learning.
38 News @ INCEIF

INCEIF Strengthens Its Line-Up of

PROFESSOR
OF PRACTICE
KUALA LUMPUR, 3 October 2022 – INCEIF in the development of infrastructure,
University is pleased to announce that telecommunications, financial services and
Bursa Malaysia Berhad Chairman Tan investment management.
Sri Abdul Wahid Omar will continue his
As Professor of Practice, Tan Sri Wahid
appointment as our Professor of Practice
shares his invaluable knowledge and
for another term, with immediate effect.
experience with INCEIF students and faculty
Tan Sri Wahid, a Visiting Fellow at the Oxford members through numerous channels. He
Centre for Islamic Studies in the UK, was is a co-instructor in a number of courses,
appointed as Professor of Practice in March including Sustainability Management
2020 and completed his term on 1 October and Investment and the MBA Sustainable
2022. He is acknowledged as one of the Business programme. INCEIF looks forward
most versatile corporate leaders in Malaysia, to his continued inputs in the development
having led four major organisations of our curriculum and syllabus.
 39

INCEIF faculty members, who are globally

respected among the Islamic finance
academia and industry, have a combined
wealth of experience and diversity with
areas of expertise in, among others,
Shariah, sustainability and fintech.
Tan Sri Wahid is a Fellow of the Association assets with generated revenue valued at
of Chartered Certified Accountants (ACCA, USD75,000 in 2011.
UK), the Institute of Chartered Accountants
As the Islamic Banking Director at Bank
in England & Wales (ICAEW) and the
of Maldives PLC, she spearheaded the full
Malaysian Institute of Accountants (MIA).
spectrum of managing the Islamic arm
INCEIF is also pleased to welcome Mdm of the bank to position Islamic banking
Suri Hanim Mohamed as Professor of business to be the main Islamic key player
Practice effective 1 Oct 2022. With over in Maldives and the South Asia region.
20 years of senior leadership experience
Suri Hanim holds a Master in Islamic
in setting up and managing new Islamic
Financial Practice from INCEIF and a
banking business units, she is well versed in
Bachelor of Arts (Honours) in Accounting,
the areas of strategic planning, stakeholder
University of Portsmouth, UK.
engagement, regulatory compliance, as
well as sales and marketing. Apart from Tan Sri Wahid and Suri Hanim,
INCEIF’s other Professor of Practice is Datuk
Recognised as a versatile and innovative
Mohd Nasir Ahmad, Chairman of CIMB
professional with a wide professional
Group Holdings Berhad, CIMB Bank Berhad
network covering government, regulators,
and CIMB Bank PLC Cambodia. He is also
as well as banks and financial institutions,
Chairman of the Malaysian Accounting
she was acknowledged as the 46th Most
Standards Board and a member of the
Influential Women in Islamic Business and
Financial Reporting Foundation.
Finance during the 3rd WOMANi Awards
2020 organised by UK‐based think tank, INCEIF faculty members, who are globally
Cambridge IFA. respected among the Islamic finance
academia and industry, have a combined
While at MUFG Bank (Malaysia) Berhad,
wealth of experience and diversity with
Suri Hanim successfully led the team in
areas of expertise in, among others, Shariah,
growing the bank’s Islamic finance assets
sustainability and fintech. The faculty,
to USD1.451 billion (30 per cent of the bank’s
coupled with continuous support from
total assets), with revenue generated from
the industry, provides INCEIF students
Islamic banking valued at USD17.3 million
with strong mentoring relationships and
in 2016 from USD5 million Islamic finance
opportunities for professional development.
40 News @ INCEIF

ISRA Consulting
ACKNOWLEDGED
AS BEST ISLAMIC
CONSULTANCY FIRM
FOR 4TH
CONSECUTIVE
YEAR

2022 is a record year for the IFN Service

Providers Poll as it saw a 70 per cent year-
on-year surge in voter participation. Over
8,800 votes from industry practitioners,
investors and corporates were received
from all over the world, the highest number
KUALA of votes cast in the poll’s 17-year history.
LUMPUR, 14 October
This year also has been most exciting
2022 – ISRA Consulting, the consulting
for contenders as it was particularly
subsidiary of INCEIF, is voted as the Best
hypercompetitive, compelling reigning
Islamic Consultancy Firm for the fourth year
champions to fight tooth and nail in
in a row in an international poll conducted
defence of their titles as rivals fought
by leading Islamic finance news portal,
valiantly narrowing the margin to victory by
Islamic Finance News (IFN).
a mere hair’s breadth, IFN said.
ISRA Consulting defended its Best Islamic
ISRA Consulting has prepared Islamic
Consultancy Firm title with 21 per cent of
finance-related acts and guidelines for a
the votes, followed by IBFIM (20 per cent)
number of countries and central banks
and Amanie Advisory (11 per cent). The
and conducted Shariah review and audit
IFN Service Providers Poll is unique in its
exercise.
recognition of the vital role that third parties
and service providers play in smoothing In over a decade, it has built a strong
the path for Islamic finance and setting network both locally and globally with its
the benchmark for its ongoing quality, strategic alliances as a group under INCEIF
consistency and creativity by supporting and ISRA (International Shari’ah Research
the underlying operations that are crucial Academy for Islamic Finance) as well as its
to its success. affiliation with Bank Negara Malaysia.
 I am also taking this opportunity
to thank all our clients around
the globe that have given us the
opportunity to serve them.
ISRA Consulting CEO Prof. Dr Ashraf Md Hashim

ISRA Consulting CEO Prof. Dr Ashraf The award also goes to all IC staff for their
Md Hashim said: 'First and foremost, hard work, and the INCEIF and ISRA staff
alhamdulillah. at large for all their support. Indeed, the
award has reminded us to never rest on our
I am also taking this opportunity to thank
laurels and work harder to always deliver
all our clients around the globe that have
the best, inshaAllah.'
given us the opportunity to serve them.

CLIENTS AND PARTNERS 2022

ISRA International Consulting Sdn Bhd (ISRA Consulting) is a wholly-owned
subsidiary of INCEIF University. We offer extensive and comprehensive
consultancy, advisory services, industry based research and training in Islamic
finance, economics and Shariah. The company is approved and registered as
Shariah Advisor with Securities Commission Malaysia to provide Shariah israconsulting.my
advisory services.

ISRA Consulting provides a wide range of consultancy and advisory services

by leveraging its experienced Islamic finance, economics, business and
Shariah senior consultants, researchers, and professionals from INCEIF
University, and ISRA, an affiliate of INCEIF University, in addition to its
extensive network of external local and international Islamic finance experts.

ISRA Consulting has developed customised programmes to meet the specific

needs of each organisation. We also specialise in providing public
programmes and conduct wide range training in the following areas:
Governance and Shariah Governance, Islamic Finance Legal Drafting,
Business Ethics, Shariah Accounting and Auditing, Risk Management, Islamic
Capital Market, and Islamic Banking and Takaful.

OUR SERVICES

ADVISORY & TRAINING & HUMAN INDUSTRIAL TRANSLATION

CONSULTANCY CAPITAL DEVELOPMENT MARKET RESEARCH

PROF. DATO’ DR AZMI OMAR PROF. DR ASHRAF MD HASHIM

President & Chief Executive Officer Chief Executive Officer
INCEIF University ISRA Consulting

WHY US?
INNOVATIVE SOLUTIONS MORE THAN A DECADE MULTI-DISCIPLINE STRONG RELATIONSHIP
Our expertise lies in We are well-regarded for Our team of experts have We have been recognized
tailoring our advice and our high-quality delivery decades of experience in as a leading consultancy in
support specific to your and operational excellence advising central banks, capital Islamic finance by virtue of
organization's requirements which has provided markets, financial institutions, our excellent networking
and needs sustainable value for our takaful companies, with local and international
clients standard-setting bodies, Islamic finance experts
regulatory authorities and
legal firms

PAST PROGRAMMES

Islamic Finance for Board of Directors (IF4BOD) Certificate in Islamic Banking

for Standard Chartered Bank

Malaysian Technical Cooperation Programme The Criteria of Shariah Quantitative Banking &
(MTCP) Screening Methodology Finance Research
 Events @ INCEIF 43

SULTAN NAZRIN
SHAH Royal Patron of Malaysian
Islamic Finance,
Officiates INCEIF
University’s New Campus

KUALA LUMPUR, 27 October 2022 – Sultan The new INCEIF University Campus is
Nazrin Shah today officiated the launch of located at Jalan Tun Ismail, Kuala Lumpur.
INCEIF University’s new campus at Jalan Measuring 130,000 square feet, the new
Tun Ismail, Kuala Lumpur. Sultan Nazrin campus sits on a 1.32 hectares of a quiet area
was greeted by the newly appointed surrounded by greenery within the bustling
Chancellor and Pro-Chancellor of INCEIF Malaysia’s capital city of Kuala Lumpur.
University, Tan Sri Nor Shamsiah Mohd The campus houses, among others, an
Yunus (also Governor of Bank Negara auditorium, classrooms, seminar rooms,
Malaysia) and Tan Sri Dr Mohd Daud Bakar computer labs, lounge areas, syndicate
respectively, together with Tan Sri Azman rooms, the Knowledge Management
Mokhtar, Chairman of the Board, INCEIF Centre and a banquet hall, to name a few.
University and Prof. Dato’ Dr Azmi Omar, This location, next to KL’s financial district,
President and Chief Executive Officer of is in line with Bank Negara Malaysia’s vision
INCEIF University, on arrival at 2 pm. to transform the surrounding area into a
world-class learning and social centre for
business and banking.
 IFHUB
Issue 4
44 December 2022

The landmark event also witnessed the

signing of a commemorative plaque by
Sultan Nazrin Shah, accompanied by Tan Sri
Nor Shamsiah and Tan Sri Azman Mokhtar,
to document the historic moment. Sultan
Nazrin Shah was also taken to a guided
exhibition tracing the early development,
history, achievements and the many
milestones of INCEIF that has given the
university its reputation as the knowledge
and thought leader of Islamic finance
pioneering in maqasid al-Shariah, and
now the centre of excellence in Islamic
social finance.

Sultan Nazrin Shah, the Royal Patron of Tan Sri Azman Mokhtar, Chairman of the
Malaysia’s Islamic Finance Initiative and Board, INCEIF University, said, 'Today’s
conferred with an Honorary Doctorate more globalised and digitalised world
in Islamic Finance by INCEIF in 2019 in requires Islamic finance professionals to
recognition of his contributions to the continuously up-skill themselves to push
growth and development of Islamic finance and expand the frontiers of Islamic finance
in the domestic and global financial arena, knowledge and practice. Only with the
was gracious enough to deliver the royal right talent and values can Islamic finance
address and simultaneously officiate the create an enduring and meaningful impact
launch of the new campus. on society and the economy.
 IFHUB
Issue 4
December 2022 45

INCEIF remains steadfast in our quest to be

the knowledge and thought leader in Islamic
finance thanks to the combined collaborative
efforts among policy-makers, Shariah
scholars, industry players and academicians.
As the world’s sole dedicated postgraduate Known to be the only university in the world
university in Islamic finance, INCEIF dedicated to Islamic finance, it aims to be
University is committed to develop world- the knowledge leader in Islamic finance
class global talent and expertise needed for by providing excellent teaching, research
the industry to realise the Islamic finance and thought leadership -- bridging
aspiration. academia and industry. Since welcoming
its first cohort of students in June 2006,
We thank Bank Negara Malaysia, who had
INCEIF has evolved into a premier higher
the foresight to set up a dedicated centre for
education institution. From the early days
education and training in Islamic finance
of offering a single online professional
which over 16 years has progressed into a
qualification, the university has expanded
full-fledged university. Currently, INCEIF
its offerings to include three PhD
University is among the world’s top five per
programmes, five Master’s programmes,
cent business schools as accredited by the
two professional programmes as well
Association to Advance Collegiate Schools
as industry-focused applied research,
of Business (AACSB).
consulting and advisory services. Today,
INCEIF remains steadfast in our quest to there are 2,166 INCEIF alumni from over
be the knowledge and thought leader in 83 countries around the world. Some are
Islamic finance thanks to the combined already making meaningful contributions
collaborative efforts among policy-makers, to the advancement of Islamic finance
Shariah scholars, industry players and at all levels, be it product development,
academicians. Our sincere gratitude to our policy framework and implementation,
partners from the public and private sectors regulation and enforcement, and
for their continuous support and generosity innovation. INCEIF University’s move to its
in the sharing of their expertise, imparting new and bigger campus is in line with its
of their knowledge, accepting our students long-term strategic plan to accommodate
for job placements and contributing to our an expanded community as the university
scholarship fund.' stays on course to be the knowledge and
thought leader in Islamic finance. INCEIF
INCEIF University was set up by Bank understands that a university is not only a
Negara Malaysia in 2005 and has been place to pursue the quest for knowledge
mandated to develop and nurture talent and skills; it is also a place to nurture the
and experts in the Islamic financial services personality of its graduates.
industry.
46 Events @ INCEIF

Book Review Forum

Conservation
of the
Environment
in Islamic Law
by Sheikh Dr Yusuf al-Qaradawi

KUALA LUMPUR, 28 October 2022 – INCEIF As an institution of higher learning with a

University’s research arm, ISRA Research focus on postgraduate studies in Islamic
Management Centre and Maybank Islamic finance, INCEIF University is conscious
Berhad successfully organised a joint forum of our role in contributing towards the
to review the newly published translated collective efforts of Islamic finance
book of the late Sheikh Dr Yusuf al- proponents to ensure that the industry is
Qaradawi titled Ri‘ayat al-Bi’ah fi Shari‘at more authentic to the true spirit of Islamic
al-Islam into English: Conservation of the law, i.e., the objectives of Shariah (maqasid
Environment in Islamic Law. al-Shariah) of doing good to people and
the planet. The publication of Sheikh al-
The book, which was first published
Qaradawi’s book is one of the testaments.
in 2001 in Arabic, comprises six main
chapters covering the Islamic foundation of During the forum session, one of
environmental conservation, problems and the panellists, Mr Radzuan Tajuddin
threats, and the Islamic strategy to protect (a consultant at World Bank Group
the environment. The translated English Malaysia), said in response to the global
version enables the book to reach a wider environmental imbalances: ‘Qaradawi’s
global audience beyond the Arab-speaking thoughts on “Islamic Green New Deal”
world, particularly given the global appeal serve as a credible framework for greening
of the sustainability agenda. the Islamic finance, i.e., building the
 IFHUB
Issue 4
December 2022 47

The Quran and Sunnah, which are

a complete guide for humans as
caliphs, have incorporated the
key principles of environmental
conservation.

capacity to mobilise green capital for need to learn and understand what has
financing and investing in environmental been outlined in both sources of the Shariah
conservation activities. Qaradawi has and apply those teachings into practise’ Mr.
indeed laid down the foundation for a Hj Ismail Hj Abdullah (President & CEO of
high-level environmental sustainability and International Green Trends Cockpit Sdn.
framework to preserve human well-being’. Bhd.) said during the forum.

Another panellist, Prof. Ashraf Md Hashim As the proponents of Islamic finance, we

(CEO of ISRA Consulting) made the remain steadfast in our belief that Islam
following remarks: ‘Islamic references on and Islamic finance have the capacity and
the environment in the English language inspiration to be the solution as a mercy
is scarce. This book is excellent because to mankind (rahmatan lil alamin). Islamic
it provides prescriptions from both the finance must endure as the catalyst in
theoretical Islamic guidelines (Quran and promoting the real economy, which in turn
hadith) and practical examples of how serves the interest of a just and progressive
Islamic civilisation historically treated society. This is our collective responsibility.
threats to the environment’.
Prophet Muhammad SAW said: ‘The world
‘The Quran and Sunnah, which are a is beautiful and verdant, and verily God, be
complete guide for humans as caliphs, He exalted, has made you His stewards in
have incorporated the key principles of it, and He sees how you acquit yourselves.’
environmental conservation. Therefore, we (Sahih Muslim, hadith no. 2742)
48 Events @ INCEIF

INCEIF University Chairman of Board of Directors Tan Sri Azman Mokhtar with
newly proclaimed Chancellor Tan Sri Nor Shamsiah Yunus.

INCEIF UNIVERSITY’S
13 CONVOCATION
TH
KUALA LUMPUR, 26 November 2022 – This year, the ceremony witnessed the
The 13th Convocation of INCEIF University inaugural graduation of graduates from
held today at Sasana Kijang, Bank Negara a programme introduced by INCEIF
Malaysia, witnessed the graduation of University in 2020 at the beginning of the
Class 2022 with a total of 99 graduands height of the global pandemic, Master of
from 28 countries, including Afghanistan, Business Administration (MBA). Designed
Japan, Kazakhstan, Kenya, Hungary, United for working professionals seeking to further
Kingdom and the United States. The top explore a career in Islamic finance, the
five nationalities are Malaysia, Indonesia, multifaceted MBA programme imparts
Pakistan, Somalia and Nigeria. This takes comprehensive knowledge in many core
the number of INCEIF global alumni to a areas of the current industry, including data
total of 2,320 from over 83 countries as at analytics, sustainability and innovation,
26 November 2022. strategic planning and sustainability in
management and investment.
 IFHUB
Issue 4
December 2022 49

Adding another distinctive factor to the Tan Sri Azman Mokhtar, who is INCEIF
ceremony, the 13th Convocation also University Chairman of Board of Directors,
marked the first convocation for the newly and Professor Dato’ Dr Mohd Azmi Omar,
appointed INCEIF University Chancellor, INCEIF President and Chief Executive
Tan Sri Nor Shamsiah Mohd Yunus who Officer, were also present at the ceremony.
is the Governor of Bank Negara Malaysia;
In his speech at the Convocation, Professor
and Pro-Chancellor Tan Sri Dr Mohd Daud
Dato’ Dr Mohd Azmi Omar congratulated
Bakar, a Shariah scholar.
the Class of 2022 and mandated, ‘No matter
Of the 99 graduates who received their your chosen path in the immediate future,
scrolls from the Chancellor, 11 graduands now more than ever, we have an earnest
received their PhD in Islamic Finance; duty in advancing the cause of Islamic
54, Masters in Islamic Finance Practice; finance in all forms. As the world undergoes
22, MSc in Islamic Finance; 6, Executive incessant environmental, geopolitics and
Masters in Islamic Finance; 4, Chartered socio-economic shocks, the next wave of
Islamic Finance Professional and 2, Master Islamic finance has to continue putting
of Business Administration. Joining them forth its focus on achieving the maqasid
were 58 recipients of the Professional al-Shariah; prevention of harm and
Certificate in Islamic Finance. The diversity attainment of benefit.
of INCEIF graduates affirms the university’s
Islamic financing and investment decision
role in developing world-class talent for the
must be judged based on ‘adl and ihsan
global Islamic financial services industry
(justice and excellence), which will drive the
and reinforces Malaysia’s position as the
environment, social good and governance
global hub for the industry.
agenda that are pertinent today. Islamic
finance is finance for all communities and
societies’.
 IFHUB
Issue 4
50 December 2022

He also recorded his appreciation to those • Shariah – UMME ROOMAAN SOOFIE,

whose contributions have made it possible SOUTH AFRICA (MSc in Islamic Finance)
for INCEIF to reinforce its hardware
INCEIF University was set up by Bank Negara
and software to keep up with the pace
Malaysia in 2005 and has been tasked to
demanded by the industry—the latest
develop and nurture talent and experts
of which is the move to the new campus
in the Islamic financial services industry.
at Jalan Tun Ismail in the heart of Kuala
Known to be the only university in the world
Lumpur city centre.
dedicated to Islamic finance, it aims to be
In acknowledgement of their academic the knowledge leader in Islamic finance
excellence, the recipients of the 13th by providing excellent teaching, research
Convocation President’s Award are: and thought leadership—bridging both
academia and industry. Since welcoming its
• PhD in Islamic Finance – DR. PRIYONGGO
first cohort of students in June 2006, INCEIF
SUSENO, INDONESIA
has evolved into a premier higher education
• MSc in Islamic Finance – AZMY MAHBOT, institution. From the early days of offering
MALAYSIA a single online professional qualification,
the university has expanded its offerings
• Masters in Islamic Finance Practice – to include three PhD programmes, five
JOVITANIA SOEDIRO, INDONESIA Masters programmes, two professional
Introduced for the first time at INCEIF 11th programmes as well as industry-focused
Convocation in 2019, the Book Award was applied research, consulting and advisory
given to graduates who excelled in selected services. With over 2,000 alumni from
domains of knowledge, as follows: more than 80 countries, the alumni have
made meaningful contributions to the
• Banking – JOVITANIA SOEDIRO, advancement of Islamic finance at all
INDONESIA (MIFP) levels, be it product development, policy
framework and implementation, regulation
• Capital Market – AZMY MAHBOT,
and enforcement, and innovation.
MALAYSIA (MSc in Islamic Finance)
52 Events @ INCEIF

Islamic Fintech

AN ENABLER
OF FINANCIAL
INCLUSION
KUALA LUMPUR, 3 November 2022 – Digital IFD is an annual conference that focuses on
finance and financial inclusion will continue the convergence of the Islamic finance and
to intertwine to become a means to an end fintech industries. Started in 2017, IFD was
for both. There have been considerable one of the first few international Islamic
efforts for digital finance in Islamic finance fintech gatherings and remains a highly
to close the financial inclusion gap, but anticipated event in the Islamic fintech
much remains to be done, said INCEIF calendar.
University Board Member Ms Siti Kamariah
This year’s dialogue was organised by
Ahmad Subki, who delivered a welcoming
ISRA Research Management Centre of
address at the 5th International Islamic
INCEIF University and sponsored by Bank
Fintech Dialogue (IFD) 2022 held at INCEIF
Kerjasama Rakyat Malaysia Berhad. The
University campus. Themed ‘Digital Finance
event also received support from the
& Financial Inclusion: Current Practice,
Association of Shariah Advisors in Islamic
Impact and Future Trends’, IFD2022 was
Finance (ASAS) and RAM Rating Services
attended by over 100 participants from
Berhad.
various countries, including Indonesia,
Nigeria and Pakistan.
 Events @ INCEIF 53

Intellectual Discourse
IBN KHALDUN’S CIRCLE OF
JUSTICE AS A MODEL FOR
COMPREHENSIVE DEVELOPMENT
A Practitioner’s Perspective

KUALA LUMPUR, 9 November 2022 – INCEIF medina) which shaped the character of
University’s research arm, ISRA Research Ottoman Empire’s leadership for a period
Management Centre, hosted an intellectual of time.1
discourse on Ibn Khaldun’s circle of
During the session, Tan Sri Dato’ Azman
justice as a model for comprehensive
Mokhtar emphasised that the Circle
development: a practitioner’s perspective.
of Justice is a dynamic, integrated and
The topic was presented by YBhg. Tan Sri
multi-disciplinary model of development.
Dato’ Azman Mokhtar, Chairman, Board of
Dr Umer Chapra, in his book The Future
Directors, INCEIF University.
of Economics: An Islamic Perspective,
The session explored Ibn Khaldun’s Circle of established the eight wise principles of the
Justice as an essential reference to modern rise and fall of civilisation, political wisdom,
development. and framework for development projected
by Islam or the metaphysics of Islam. These
The Circle of Justice is reported to have
principles can serve as a guideline for the
first emerged in a mysterious writing
growth of a nation and an institution.
attributed to Aristotle, which was allegedly
expressed as advice to Alexander the Great Tan Sri Dato’ Azman Mokhtar also stated
before it was adopted by numerous Muslim five calls to action that must be prioritised,
luminaries in the past, such as Ibn Khaldun, including removing injustices (nahi
Nasir al-Din al-Tusi, Jalal al-Din Davani, munkar), doing good (amar ma’ruf),
Abu-l Fazl (advisor to Emperor Akbar) of emphasising the issue of social justice,
the Mughal Empire, and Ottoman scholars realigning the banking sector to serve
such as Qınālızāde ʿAlī Çelebi (d. 1572) the real economy, and to strengthen the
who deployed it in the context of practical institutions. In the end, humans play a
wisdom (hikmah amaliyyah)—specifically vital role as servants and khalifahs in the
in the governance of the state (tadbir al- development of nations.

1 https://www.ikim.gov.my/new-wp/index.
php/2021/10/01/circle-of-justice-a-pathway-to-a-
different-future-a-solution-to-systemic-failures/
 Make A Gift Now
A Little Contribution Can’t Change The World But It Can Change Someone’s World

The INCEIF Endowment Fund (IEF) is managed by a Board of Trustees comprising professionals and
corporate leaders who are guided by the Shariah principles. The establishment of IEF is based on one of
the principal sources of perpetual support in our quest to produce ethical future leaders and innovators
in Islamic Finance to meet the demands of a dynamic and ever-changing world.

Assist deserving students to pursue Enrich Islamic Finance knowledge Enable experts and academicians Boost operational and student
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consistent stream of new knowledge and academics among others.
products that fulfil industry needs.

The Beneficiaries Of Your Contribution:

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Contribution of RM1,000 or less will be channelled into one of the four options above and
other endowment programmes as deemed fit by INCEIF.

Be part of INCEIF’s knowledge empowering legacy by contributing to INCEIF Endowment Fund today

Contribute any amount through these channels at your convenience:

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Contact us: www.inceif.org/ief endowment@inceif.org +6013 282 0224

wanarif@inceif.org (Wan Arif Wan Ahmad)

Together WE create a better World

 Events @ INCEIF 55

INCEIF SIGNS MOU

WITH UNIVERSITAS
SEBELAS MARET
INCEIF University today adds another and Professional Studies Prof. Dr Mansor H.
international partner to its list of Ibrahim and USN Vice Rector for Planning,
collaborators, Universitas Sebelas Maret Partnership, Business and Information
(UNS) of Surakarta, Indonesia. The event Affairs Prof. Dr rer nat H. Sajidan signed as
was commemorated with a virtual signing witnesses, respectively. Among the areas
where INCEIF University President & of potential collaboration are Student
CEO Prof. Dato’ Dr Mohd Azmi Omar Mobility Programme (SMP), joint research
signed on behalf of INCEIF while USN and publications, and joint participation in
was represented by its Rector, Prof. Dr activities such as conferences, academic
Jamal Wiwoho. INCEIF Deputy President exchange, and educational programmes.
Academic and Dean, School of Graduate
56 Events @ INCEIF

MTA AND INCEIF UNIVERSITY

COLLABORATE TO
DEVELOP MAQASID-BASED
SCORECARD
For the Malaysian Takaful Industry

KUALA LUMPUR, Wednesday, 7 December the industry’s Value-Based Intermediation

2022 – The Malaysian Takaful Association for Takaful (VBIT) Roadmap in October.
(MTA) today announces the launch of Both frameworks set out the strategic
pioneering industry-driven research in direction, aspirations and initiatives to be
collaboration with INCEIF University to achieved by the industry within the next
develop a maqasid-based scorecard for the two to five years.
Malaysian Takaful industry.
In his speech, Mr Elmie said the scorecard
MTA and INCEIF University, through its could be ‘the first of its kind in the world
research arm ISRA Research Management developed for an industry’. Disclosing
Centre, will develop a maqasid al-Shariah that while all the initiatives identified by
Scorecard (MSS) that has workable and the VBIT Roadmap would bring benefit
measurable performance indicators, taking to the industry, society and country, MTA
into consideration the industry’s pain acknowledged that ‘there was a distinct
points. These indicators would be used need to connect all these initiatives to the
to chart the progress and impact of the spiritual aspect of VBIT’.
industry’s growth and development.
‘This connection is critical as the acceptance
At the event to launch the MSS collaboration of takaful as an alternative to conventional
held at INCEIF, MTA Chairman Mr Elmie insurance is predominantly due to it
Aman Najas said 2022 was a significant year being Shariah-compliant in nature, which
for the industry as it embraced the launch by default, suggests its compliance to
of Bank Negara Malaysia’s Financial Sector maqasid al-Shariah,’ he added.
Blueprint (FSB) 2022–2026 in January, and
 IFHUB
Issue 4
December 2022 57

INCEIF University Board of Directors As such, this research specifically aims to:
Chairman Tan Sri Azman Mokhtar said
1. develop a scorecard to measure VBIT in
INCEIF’s strategic collaboration with MTA
light of maqasid al-Shariah;
would offer the takaful industry with a
much-needed instrument in realising the 2. identify the key performance indicators
true spirit of maqasid al-Shariah. (KPIs) for the scorecard;

‘In particular, the development of the first- 3. introduce risk-weighted indicators

of-its-kind scorecard will help to identify underlying the scorecard for takaful; and
the key performance indicators and their eventually
desired outcomes in line with the intrinsic
values of Islamic finance as outlined by 4. measure the impact of the maqasid
BNM. This will further enhance the impact al-Shariah-based VBIT scorecard on
measurement instruments needed by the selective takaful business lines, offerings
takaful industry in Malaysia.’ and products.

For the takaful and retakaful operators, the The joint effort will support the VBIT
scorecard will benefit them in many ways, aspirations that accompany the potential
including facilitating the achievement of growth of the takaful industry in Malaysia.
maqasid compliance through strategic In this regard, the scorecard goes beyond
planning, enhanced decision-making, measuring successful initiatives, rather it
advanced reporting and full transparency. would elevate the measures to identify the
The scorecard is a measurement tool to impact of such initiatives, including how
demonstrate and validate VBIT based well the initiatives are carried out and to
on maqasid al-Shariah and set a clear what extent they have helped vulnerable
distinction between conventional insurance communities.
and takaful in terms of value proposition The scorecard aims to ensure that the
and product differentiation. initiatives should, as much as possible,
This, in turn, would enhance the bring the benefits of maqasid al-Shariah
stakeholders’ confidence and satisfaction to the communities they serve. The MSS
in takaful/retakaful value proposition, is also hoped to build a clear demarcation
ensuring that the operators are able between conventional insurance and
to handle financial shocks and remain takaful in terms of value proposition,
resilient. Also, of importance, the initiative product differentiation and real impact,
would showcase Malaysia as a global leader thereby enhancing stakeholders’
in operationalising maqasid in takaful and confidence, perception and satisfaction in
retakaful products and services. the industry and its offerings.

MTA envisions that the MSS would INCEIF University has always strived to be
enable the takaful industry to accurately the bridge between academia and industry,
measure their business and non-business be it in its teaching, research, and executive
performance based on well-defined KPIs, training programmes, to translate the
clear targets and timelines. It would also knowledge gained in classrooms and
facilitate maqasid al-Shariah compliance gleaned from textbooks into real, adaptable
and enhance decision-making, strategic industry-focussed solutions.
planning, advanced reporting and better
transparency.
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