Kuala Lumpur: Malaysian Prime Minister, Datuk Seri Najib Tun Razak, has said that there is a potential in Islamic microfinance that can help in developing ethical yet profitable products.
The Prime Minster also said that Islamic microfinance can also boost social entrepreneurial activities and it can prove to be profitable if invested in social funds for a long-term.
He was describing the benefits of Islamic microfinance in his keynote address at the Global Donors Forum 2012 in Malaysian capital.
Najib also holds the office of Finance Minister. He pointed out that through partnership finance, Islamic microfinance was about financial inclusion, entrepreneurship and risk sharing but this approach is hardly found in conventional microfinance. This approach makes Islamic microfinance unparallel.
Najib addressed, "In recent years, some microfinance institutions have stepped in to service low-income Muslim customers and meet their needs for products consistent with Islamic financial principles.”
"This has led to the emergence of Islamic microfinance as a new market niche and it is now for us to build on it," he added.
He believes that Islamic financial institutions still have to go a long way despite they have progressed amazingly and proved their potential among their competitors. He urged Islamic financial institutions to make their services widely available to the poor as this could help curtail the poverty level across the globe.
Najib had a view that Islamic finance has brought philanthropic spirit with itself and it spreads giving and business practices simultaneously. Islamic finance can transform the fate of billions of poor lives in the world.
He stated, "Quite simply, financial innovations geared towards empowering not dominating people, can revolutionize our world. So, the ultimate focus of Islamic finance should be its core value proposition and not just furthering assets.”
He said that civil society and private sector can bring positive change in the society; it is not only the duty of governments to think for the society. In this regard, Islamic finance can play a vital role in betterment of the society.
He urged the private sector to come forward in the time of economic downturn as it is obligatory for the sector to pull the poor out of the adverse impacts of financial crisis prevailing globally by supporting the social development projects.
Najib, who is also the acting Minister for Women, Family and Community Development, said, "As part of the process, I want to see Malaysia transform its faith-based giving into a robust agent of social change, for only an efficient Zakat management system coupled to a strategic distribution approach, seems to be the right vehicle for converting recipients into givers."
He admitted that there is still a room for improvement in Zakat and Awqaf management system in Malaysia and positive measures are needed to be taken to upgrade the system.
"I am delighted to see this forum examining Zakat, Awqaf and Islamic microfinance as potential vehicles for advancing impact philanthropy and investing in the Muslim world," he added.
The Global Donors Forum is an annual convening of the World Congress of Muslim Philanthropists to promote effective giving and forge strategic partnerships for high-impact social investment.
"It is time to re-examine the way we give, to blaze a trail towards high-impact philanthropy, while facilitating strategic partnerships among like-minded donors," Malaysian PM concluded.