On July 5 at Anekprasong 2 Building, Thammasat University, Tha Prachan campus, the Thammasat Institute of Area Studies (TIARA) presented a seminar on current and future Malaysian economic policy. The TU Library owns several books about the economy of Malaysia. The distinguished speaker was Dr. Jaseem Ahmed, former secretary-general of the Islamic Financial Services Board (IFSB), an international body based in Kuala Lumpur, Malaysia. The IFSB sets standards and provides guidance for Islamic banking and finance regulatory and supervisory agencies. It was founded in 2003 by a group of central banks and the Islamic Development Bank, located in Jeddah, Saudi Arabia with shareholders including Saudi Arabia; Libya; Iran; Egypt; Turkey; United Arab Emirates; Kuwait; Pakistan; Algeria; and Indonesia. Among the IFSB’s useful services is to establish standards for identifying, managing, and disclosing risk related to Islamic financial products. How do Islamic banking and Islamic finance differ from other approaches to banking and finance? Their activities follow sharia (Islamic law) to develop Islamic economics or commercial law. By complying with Islamic scripture, Islamic banking and Islamic finance bring religion into the financial sphere, ideally with the goal of economic reform. When dealing with issues such as property, money, employment, and taxes, the idea is to reach such goals as more employment, stable prices, economic equity and productivity growth.
Dr. Ahmed was born in Bangladesh. He earned a bachelor of arts degree in economics from the University of Sussex, UK and also received two postgraduate degrees in economics from Yale University. On July 5, Dr. Ahmed pointed out that in Malaysia, you can’t look at economics without also looking at wider issues. He asserted that it is important to level the playing field in access to education to improve the social fabric… In Malaysia, corresponding with economic growth are new social and economic groups. These new urban groups are focused on justice, fairness, equity, and reform of corruption. The path to stability is to assimilate these groups. Malaysia has experienced exceptional inter-generational social mobility. All ethnic groups have benefited from social mobility.
Last year, in an interview for Oxford Business Group, Dr. Ahmed suggested:
Many people within the IFS industry would acknowledge that a different name for the industry – perhaps I-Finance, would broaden its appeal. Successfully branding Islamic finance as “ethical” could support market expansion in the western world, where people are looking at socially responsible and green investment opportunities. IFS has only just begun to adopt these concepts. While ethical conduct is built into Islamic finance, via sharia compliance, the sector has much to do in terms of developing a focus which evaluates the impact of investments in the same way the socially responsible investment (SRI) industry does. SRI is deeply committed to impact and wants to see certain things happen, whereas Islamic finance is predominantly focused on a negative list – of activities to be avoided. As the Islamic finance investment industry becomes more sophisticated, there will be greater convergence. At the same time, the industry has been very successful in convincing governments, including the UK, Luxembourg and South Africa, to start looking at Islamic finance as another viable method of public financing.
Among the present goals are
to promote small enterprises and entrepreneurship while using risk-sharing instruments, rather than credit-based instruments which carry a high interest cost. If we can develop these and make them generally applicable with a low transactions cost, then IFS will truly have come of age. This is an area in which the conventional sector is very advanced in terms of delivery through the use of mobile technology, and it is a segment that IFS needs to work towards developing. It is relevant here to mention takaful (Islamic insurance), as there are many people around the world who are not insured, particularly in Muslim countries, and who are unwilling to be served by conventional insurance products. Multinational development banks could usefully start considering takaful for poverty reduction projects. Meanwhile, the British authorities are looking into the possibility of offering takaful for student loans.
Thailand and Malaysia: Cooperation and Educational Exchange
Last year, the Diplomatist Magazine featured an analysis of the trade and economic relations between Thailand and Malaysia. The author noted that
Malaysia and Thailand, both active members of the Association of Southeast Asian Nations (ASEAN), enjoy cordial diplomatic relations and share strong bilateral ties in areas such as trade and investment; security; education and vocational training; youth and sports; tourism; and connectivity and socio-economic developments in border areas… Thailand and Malaysia have both agreed to foster co-operation on trade and investment. Both countries emphasised on economic development and rail and road connectivity along their borders. To abolish the challenges of development, poverty and unemployment in Southern Thailand, the government is now pushing forward the development of the Sadao-Padang Besar Special Economic Zone in the south in order to generate employment and income for local people. The six sectors where Thailand plans to urge Malaysian investors to conduct more border trade are oil and energy, rubber, automobiles, sugar and rice and tourism… Malaysia is also interested in promoting tourism between the two countries.
Bilateral trade between Thailand and Malaysia is increasing. In 2011 the trade value was US$22.95 billion. This is a considerable advance from just a few years ago, as expressed at a seminar at the Pullman Bangkok King Power Hotel, Bangkok, in September 2012 on Malaysia-Thai Relations: A Case of Benign Neglect or One-Sided Affair? Joint Seminar on “Socio-Economic Cooperation in the Border Areas between Thailand and Malaysia.” On that occasion, experts from the International Institute of Public Policy and Management (INPUMA), University of Malaya explained that Thailand and Malaysia tended to take each other for granted in the past, because for Malaysia, Thailand was not seen as a problematic neighbor, so both nations were content with the way things were, without much consideration of future possible collaboration. Education was one area seen as ready for potential development. Universities in both countries have signed Memorandums of Understanding (MoUs), with most Thai students currently enrolled at institutions of higher learning in Malaysia being from the Southern Provinces. Malaysia might make an effort to attract more students from Bangkok and other provinces as well. Most Thai students in Malaysia appear to be preparing for careers in the sciences. More scholarships in the humanities and social sciences would interest a wider range of Thai students to consider getting degrees from Malaysian universities.
(All images courtesy of Wikimedia Commons)