The prospects of Islamic finance in Malaysia are good because it has a more diversified economy than most Gulf-based countries, says International Centre for Education in Islamic Finance professor Dr Murat Cizakca.
In comparative economic history, Malaysia’s economy comprised more viable industries than its Middle Eastern counterparts, he said.
“Malaysia does not rely solely on just one source for its economic well-being. The other (Gulf-based) countries, however, may rely on one main source, which is oil,” Murat said after his lecture on The Maqasid Al-Shariat, Rule of law, democracy and capitalism yesterday.
“Over here, it could rely on its agricultural or petroleum-based resources, for instance,” he said, adding that a diversified economy would reflect better on the Islamic finance sector.
With a more diversified economy, he said, there would also be more scope for investment. Another factor that gave Malaysia an edge was the fact that it was a democratic country, Murat said, noting that there were significantly fewer wars waged within democratic countries.
“Democratic countries do not fight wars against each other. Wars are terribly destructive, much more so in our days with ever more potent weapons.
“Therefore, in a world dominated by democracies, destructive wars that involve expensive armament can be avoided. The funds saved can be channelled towards human and economic development projects instead,” Murat added. Further to this, he said, the relationship between democracy and economic well-being could not be denied.
Introducing investment institutions in democratic countries was easier, he said. “With democracy, you can have political parties that compete to bring in these (investment) institutions, such as trusts, financial institutions and venture capital. “And with these institutions, development of the finance sector is better. In Malaysia, for instance, you have institutions like Bank Negara that promote Islamic products.”
On Malaysia’s development potential moving forward, Murat said: “Although there are on-going developments in the Gulf countries, Malaysia would have a better potential for development because of its diversified economy.”