HQ: For those who are less familiar with ISRA, would you please share a bit of background i.e. what does ISRA do?
Dr. Akram: ISRA stands for International Shariah Research Academy and it was founded in 2008, by the Central Bank of Malaysia (Known as Bank Negara Malaysia). Simply said, the core mandate is to bridge the gap between academia, practitioners and also the Shariah Scholars as these three are the most important stakeholders of Islamic Finance. And of course, being a Shariah Academy our mandate is to ensure whatever activities we do – serve the Shariah aspects of Islamic Finance. Furthermore, ISRA’s aim is to bridge the gap between local Malaysian Scholars and International Scholars through different activities we organize throughout the year.
In terms of ISRA’s core business we have the research that we do which is very much different from what some other research academies do. Our focus apart from fundamental research lies on applied research. Because, at the end of the day when you talk about Islamic Finance its not something people just need to read and understand but also implement and apply in real life. Our aim is not to come up with research that is only conceptually very nice, but cannot be applied due to some regulative, taxation, legal burdens which were not addressed properly in the research phase.
HQ: ISRA was awarded as the best Research Academy for Islamic Finance for the 5th time this year by RedMoney, what would you say brought you this success? What is it that makes ISRA so special?
Dr. Akram: First thing, is the enormous support we get from the Central Bank, not only in terms of funds but other support such as the independence we have through which they allow us to be creative and innovative, meaning that they do not put any hurdles on us to embark on any journey we see as important for ISRA. All the support and the assistance overall they provide us has made us what we are today.
Second factor that has helped us reach here is the people. I always believe in the capability of people, and Alhamdulillah (Praise God) I can say we have a team of wonderful people, a great set of administrators, researchers that assist each other to do their job. As an academician myself with the needed market exposure I am very particular in choosing people who will join my organisation. With a total of 43 people currently we are striving for more growth, which leads me to the third factor that has helped us grow – a supportive work environment. We always try to create a conducive environment with an easy channel of communication so that they know we are always open to communicate and share our worries, suggestions etc. We also give our employees the freedom to act independently. And all of these factors combined have made ISRA into the institution that it is today.
HQ: What are the main focus areas of ISRA when it comes to research today? Which areas are most challenging, especially in the field of applied research you have mentioned and why?
Dr. Akram: Among some of the challenges we have, I would point out the challenge of getting the needed data and information. To give an example, if you look at our portal I-FIKR, we do have the data and the biggest compilation of fatwa worldwide with regards to Islamic Finance, in both Arabic and English language, but in getting this data from some regulatory agencies or banks due to their own compliance requirements is very challenging.
Another challenge we are trying to overcome, and this is a general problem within the Islamic Finance industry, the people who do Islamic Finance but think conventionally. So the challenge here is to explain to them and make them understand the core differences between Conventional and Islamic Finance. Some financial practitioners understand Islamic Finance as a hurdle with too many restrictions, but it really is not if you follow the framework that is set by the Qur’an and Sunnah. So our challenge is to educate these people on proper implementation of Islamic Financial practices.
Lastly, to overcome the two challenges mentioned, it is hard to find the right people that are knowledgeable in this specific industry, the candidates should also have a good English and Arabic language proficiency as well as the local Malaysian language. Thus, finding people that have all the above and are still capable to grasp the job requirements is not an easy task.
HQ: As you mentioned important challenge to overcome is education of people, to achieve this ISRA organises annual flagships events such as the Islamic Fintech Dialogue (IFD), the regional Muzakarah event and as well as the International Shariah Scholars Forum (ISSF) what are the major contributions of these events towards educating and the development of the Islamic Finance industry?
Dr. Akram: Through the several engagement that we organise, such as the dialogues where we gather the practitioners, Shariah Scholars and Academia to discuss issues that may have arisen within the industry and find unified solutions for it. MUZAKARAH for example which is happening within two weeks time in Brunei, is such an event. The uniqueness of our events I would say is that they aim to discuss specific issues, nowadays there are many events but most of them are too general and broad, we try to keep it specific and engage all three fundamental players of the industry (Scholars, Practitioners and Academia). Of course we also have our engagement with the Central Bank, Securities Commission etc.
Lastly, I would like to point out that our events aim is for scholars to discuss issues and come up with a unified thinking, as in Islamic Law there is more interpretations and views etc. so if we are able to bring closer the thinking of the scholars so then the diversification will be lessened. We do not want to standardise the opinions but lessen the diversity and most importantly through these dialogues we build tolerance towards other views, which helps close the gaps in the differences in Shariah interpretation. Lessening this gap brings more stability in the industry itself and that is why these dialogues are important.
HQ: ISRA provides also consultancy services, recently you won a prize for best consultancy house. What role does ISRA as a consultant play in overall development of Islamic Finance?
Dr. Akram: ISRA has recently gotten two awards by the Triple A Awards – Asset Asian Award in two categories, both as best Consultancy Service and best Research House too.
ISRA, even though it’s funded by the Central Bank, is encouraged to perform it’s own business activities to find own source of funds, because at the end of the day whatever is generated by ISRA goes back to ISRA to serve its purpose of knowledge sharing. ISRA Consultancy was established in 2014.
We offer consultation services, translation services, training for the industry players. In terms of consultancy of course we have done some work here in Malaysia for the companies here, such as if the companies or banks want to convert their businesses from conventional to Islamic, or open an Islamic bank etc. In terms of training we have done many trainings for banks and financial institutions. Currently we are providing one of our flagship programs to all board of directors, as the Central Bank has made it mandatory for all members boards of Islamic banks to be educated about Islamic Finance.
Further, we provide consultancy services to governments, for example we have developed the legal and regulatory framework on Islamic Finance for Maldives, we have almost completed the legal Shariah framework for Tajikistan and some other governments too. Further, we work closely with the Islamic Development Bank which shows actually that the importance of ISRA Consultancy is global.
HQ: ISRA is also known for its various publications, what are some that you are mostly proud of? Can you share a bit about the Islamic Economics textbook that was launched by the Malaysian Prime Minister this year?
Dr. Akram: When it comes to publication, we have several forms of publication, the most outstanding and the one we are most proud of is our Textbook. The first textbook we have published was Islamic Finance Principle and Operation in 2009, now we already have the second enhanced edition. This textbook is being used currently in 80-90 universities globally as reference book for teaching Islamic Finance. And of course the most recent is the textbook about Islamic Economics that was launched by the Malaysian Prime Minister himself this year. We are greatly proud of this book, as it is the first of its kind to be written and published, the first truly comprehensive textbook about Islamic Finance. The uniqueness of this book is that it was written by writers from all over the world, experts from Middle East, Europa, Asia etc. that are involved in the industry. These contributors like to write for us because they recognize the quality of our work, and that has really given us an advantage to come up with this type of a publication.
Currently, we have lots of requests from universities worldwide that are also eager to include our textbook in their curriculum.
Apart from this book, we have books about Sukuk, Capital Markets, Islamic Legal Maxims and few other. Furthermore, we have our research papers or so called IRP, each paper focuses on certain issues whether it is capital markets, banking issues or other each topic will be discussed thoroughly in the paper. More then 100 IRP’s have been published in different languages including Malaysian, Arabic and English. We are very proud of the usage of the papers in daily functions even judges in courts have cited our research papers as references in their judgement. It is always a great honour to see the research we have gathered is used not only in academia but also applied practically.
Lastly, we have our portal I-FIKiR , which is very unique as it complies all our publication together. And the portal highlight it is the fatwa section as I-FIKR has one of the most fatwas at one place accessible in English too. The portal is interactive, we are trying to enhance it with videos to make it more appealing for people to get information. We hope that in the future I-FIKR will become the portal to which people will turn in search of anything related to Islamci Finance. We also have our journals where articles are contributed by both academia and practitioners, to be able to combine the knowledge and apply it.
HQ: In your time as the Executive Director of ISRA, what would you point out as the biggest developments in the Islamic Finance Industry in Malaysia – as the leader of Islamic Finance and as well as globally?
Dr. Akram: In terms of some special developments I would like to point out that with the existence of ISRA we have been able to change the perception about Malaysian Shariah Interpretation. In the past, 10-15 years back I have always been asked why Malaysia is different when it comes to Shariah interpretation form the rest of the world. We allow certain instruments that are not for example allowed in the Middle East so people would judge us as being to liberal, but with the existence of ISRA we have been able to explain our models and framework so now I am very proud to see others following our steps and adapting those frameworks such as the Shariah Governance Framework. I think this is a big development locally but it did have a global impact, as we do engage with the global community a lot. Before existence of ISRA, people did not have a platform to understand what we in Malaysia are doing and why we are doing it.
Another special development, is the shift from looking at Shariah in a different way, looking at Islamic Finance as a sustainable model and building a comprehensive approach towards Services of Islamic Finance. We are driving this shift, from Shariah as the Islamic Law but to view the ethics that is embedded within the principles of Islamic Finance and the impact on society this industry can have. Our more comprehensive approach towards Islamic Finance has contributed to more global acceptance of Islamic Finance globally as a sustainable financial model.
HQ: Any trends or patterns that you have noticed in the development of Islamic Finance industry in Malaysia from which current industry players can benefit from?
Dr. Akram: Currently, I have noticed that Islamic Finance industry players have neglected the demand from consumer side. A consumer when faced with choice, will compare and in this Islamic Finance should not be less than Conventional. In my overseas trip I often get comments on poor services from Islamic Banks in comparison to the Conventional Banks present in those markets, these comments sadden me, Islamic Finance players must level up the standards and keep up with consumer expectation. So, I would advise all industry players to keep meeting the expectations of the consumer, especially today in fast technological advancements such as the rise of Fintech. We should not see it as a hurdle to Islamic Finance but as opportunities to enhance our services and gain more market traction. We should make use of the technological platforms available today and educate us as industry players and consumers as well.
HQ: ISRA celebrated its 10 year anniversary last year, what is the biggest achievement for ISRA within this period of time?
Dr. Akram: I would say that within these 10 years ISRA has accomplished itself as a brand on a world wide scale within this industry. With the collective effort of all my team members we have managed to become known for the quality of our work and a place where people come to learn and inquire about Islamic Finance.
Alongside of building our brand other achievements have followed.
HQ: Where do you see the Islamic Finance industry going in the next few years with new elements and players, due to the availability of cutting edge technology i.e. fintech and all?
Dr. Akram: The future is there for Islamic Finance, I see a steady growth within many markets on a world wide level. People are looking for alternatives, Islamic Finance can provide those alternatives but we need to do more. Islamic Finance covers only less than 1% of the worldwide market, so we have a 99% untapped markets we can serve, not only the Muslims but also the non-Muslims.
Islamic Finance is not only for Muslims, we have Malaysia as the clear example where many Islamic Banks are owned by non-Muslims and many non-Mslims decide to use Islamic Banking services due to the quality of products and services offered. Industry players also need to work together to boost the growth of Islamic Finance, a good example in Malaysia is the Investment Account Platform – where banks have come together to create products that serve the community and in turn it boosts the growth of Islamic Finance.
The industry players should aim to bring benefits to everyone, in Islam we have many instuments aimed towards that, we have Zakat, Wakaf and Saadaqah all aimed towards closing the gap between the rich and the poor.
We are also undertaking a Wakaf project with several banks, where we try to strategize on how we can boost Waqaf to support Malaysia as a country.
HQ: You have mentioned that 99% of the worldwide market is untapped in this industry, where do you see the most growth when it comes to Islamic FInance in the coming years, in which markets? What are the regions that industry players should consider expanding or converting their service in your opinion?
Dr. Akram: Looking at the global level, I have seen a clear growth of interest in Islamic Finance in Central Asia and Africa. Of course, the Middle East and South East Asia is already saturating in this industry but Central Asia and Africa are growing rapidly and these areas will need guidance in implementations, service trainings, and support from all of us industry players.
HQ: Any closing Remarks?
Dr. Akram: Not much, as we have covered many topics, except that I hope that all the Stakeholders will aim to work together and have more interaction and bring wonders to the world through Islamic Finance. The key is in interaction and getting rid of the competitors mindsets.
HalaalQuest would like to thank Prof. Dr. Mohamad Akram Laldin for devoting his time and effort in providing extensive answers about ISRA and recent developments in the Islamic Finance Industry.