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Opalesque Islamic Finance Intelligence

Industry Snapshot: What Makes Sense? By David Vicary

Monday, May 31, 2010

Daud Vicary Abdullah is Global Leader of the Deloitte Touche Tohmatsu (DTT) Islamic Finance Industry group. Daud, based in Kuala Lumpur, oversees the overall strategy and development of DTT's Global Islamic Finance Industry group, and provide guidance to member firms on governments, corporations, and financial institutions related to the Islamic Finance sector. Daud was the first Managing Director of Hong Leong Islamic Bank, and following that, he became the Chief Operating Officer and Acting CEO at Asian Finance Bank. A distinguished fellow of the Islamic Banking and Finance Institute of Malaysia (IBFIM), Daud is also a Chartered Islamic Finance Professional (CIFP) and a former Board member (2003 – 2007) of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). He is the author alongside Keon Chee of"Islamic Finance: Why it makes sense - Understanding Its Principles and Practices" published in January 2010 (Marshall Cavendish).

Napoleon Bonaparte, when faced with the issue of what to do with his army during the summer months, as it was too hot for them to march, suggested that they plant trees. To this his advisors queried as to why trees? As they take a long, long time in growing and how would it be beneficial? Napoleon's response was to ask them how long does it take for a tree to grow and provide shade. The reply was- about 25 years before a tree is fully grown and provides shade. To which Napoleon responded by saying"then there is not a moment to lose, is there?"


The moral of this story is that in order to affect social change one has to have long term strategic thinking in place. Strategic thinking that leads to actions which would make people query. As, through the process of enquiring, one obtains knowledge. And that knowledge, when implemented, brings about social change which is beneficial. Beneficial to future generations.

 

Do I have to be a Muslim to use Islamic Finance?

Like Napoleon's advisors, many ask this question 'do I have to be a Muslim to use Islamic Finance"? The answer is no!  The author understood that this question was not what it appeared to be. It was a reflection of something much greater. Something that the people asking the question were hiding. It was the lack of knowledge on the basics of financial management. People didn't want to display how little they knew about financial management. 


In 2007, the author undertook two, key, strategic steps in order to provide an answer to this question:


1) By authoring a book, titled"Islamic Finance: Why it Makes Sense". Which includes details on how, not just Islamic Finance works but, how the conventional financial management system works and highlighting the difference between Islamic Finance and conventional finance i.e.: Islamic Finance is governed by Sharia but with practicality of use. Therefore providing clarity and knowledge to the question of"what is the difference between Islamic finance and conventional finance". 
2) And in a program that educated youngsters on financial management, the author undertook to include an educational module on Islamic Finance targeted to the youth. By providing this awareness and being educated on the benefits of Islamic Finance it enabled the youngsters to choose between conventional finance and Islamic Finance with full knowledge of the benefits that one would receive.


The social benefits that these two steps brought about:


1) Youth (6 years and above) are now being educated (and being aware) of how financial management helps in one's life in terms of providing the link in focussing common human aspirations to financial management in achieving those aspirations.
2) In the long term, (15+ years), today's youth will become tomorrow's leaders. Given this educational awareness they start with a solid foundation where financial management is concerned and a clear idea of what Islamic Finance is and the benefit of it. 
3) Socially such an educational program also provides a strong platform on"de-mystifying" Islam and showing its community benefit leading to a change in attitude and perception on Islam for e.g. in China, though there are approx. 100milionl+ Muslims. Many of whom are Muslims in name only. To such an audience a universal educational program on good financial management brings forth what they want to know in order to achieve the aspirations they have whilst understanding the benefits of Islamic Finance and thereby Islam. In USA, the private equity business opportunity is huge. Yet it lacks a comprehensive understanding of the benefits of Islamic Finance from the perspective of achieving common human aspirations.

Planned education is the way forward in order to affect attitudinal and perceptual change to take place on Islamic Finance and thereby facilitate entry and willing acceptance in both Muslim and non-Muslim markets simultaneously.



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