KUALA LUMPUR, Jan 14 (Bernama) – Almost 60 per cent of the Small and Medium Enterprises (SMEs) are not aware of the availability of Islamic business financing facilities, said Bank Negara Malaysia (BNM) Assistant Governor, Adnan Zaylani Mohamad Zahid.
He said most of the SMEs adopted conventional financing as some of them might still have the misconception that Islamic finance is only for the Muslims.
“Today, we hope to dispel this and create more awareness about what Islamic finance is and has to offer,” he said in a statement today.
Adnan Zaylani also said that Islamic finance is an established industry in Malaysia and had banking assets amounting to RM874 billion or 30.4 per cent of the total banking assets as of end-September last year, with an annual growth of 10 per cent over the past three decades.
“As at the end of the third quarter last year, takaful contributions stood at RM1.7 billion, with market penetration at 15 per cent. The growth of Islamic finance in the country has been resilient and supportive of social and economic developments,” he said.
Among the spectrum under Islamic finance are the investment account platform (IAP) which was established by six Islamic banks in 2016 which to date has supported eight ventures worth RM161.3 million.
Besides IAP, Adnan Zaylani said Islamic finance sukuk was also an alternative form of financing for businesses, such as green sukuk for green businesses.
To date, five green sukuk have been issued by Malaysian solar companies to finance solar power projects, amounting to RM866.8 million since July 2017.
All Islamic finance transactions must reflect Islamic values which are ethical and fair, he said.
“As such, Islamic finance practitioners are duty-bound to observe the norms of high ethical conduct to uphold the values and the sanctity of Shariah. Businesses can therefore take assurance that their financial needs are well served, managed and protected.”
He added that the Islamic financial system also promoted value-based intermediation (VBI) which are encouraged to adopt more structured frameworks to assess how they create value and impact, particularly in response to changing economic, social and environmental conditions.
“In going beyond profit, VBI is set to be one of the drivers for Islamic financial institutions to assist entrepreneurs to grow their businesses.
“This would require an understanding of the entrepreneurs’ specific needs and circumstances prior to recommending a particular product or service, rather than focusing on a predetermined range of services,” he said.