Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on April 30, 2019

KUALA LUMPUR: Policymakers should take a more active role in the introduction of Islamic products for financial inclusion to ensure better levels of adoption, said Securities Commission Malaysia (SC) chairman Datuk Syed Zaid Albar.

According to the SC, it is estimated that more than 1.7 billion adults or one-third of the world’s adult population do not have access to formal financial services, with many of them in developing countries.

The potential of Islamic finance in enabling greater financial inclusion is vast, though a clearer direction is needed to ensure our efforts have the desired impact and will remain sustainable in the long run, Syed Zaid said at a conference themed “Islamic Finance: A catalyst for Financial Inclusion”, yesterday.

He said while a private sector-driven approach to the development of market-based products and its supportive ecosystem has its merits, it also has its limitations, particularly when there is a need to prioritise socio-economic outcomes over investment returns.

Hence, he urges more policymaker participation. “There must also be buy-in from all stakeholders. My own private sector experience has taught me that to achieve intended outcomes, effective coordination and mobilisation of resources is pivotal,” he said in his keynote address at the event.

Ultimately, he said providing access to financial services is a universally shared vision for all nations, including Islamic countries, though in reality, access to financial services is not uniform nor consistent.

“The inability to access the most basic of financial products and services prevents some segments of a country’s population from fully participating in its growth and prosperity. It translates into costs for the nation as inequalities in terms of opportunities and wealth can hinder economic growth, instead of reaching its optimal potential.

“This is why financial inclusion is quintessential. It remains a priority in the global reform agenda given its significance in stimulating growth and employment, and poverty reduction. It also enables shared prosperity for all segments of society, leading to better social well-being,” he added.

Also present at the event was World Bank Group representative to Malaysia and country manager Dr Firas Raad, who added that Islamic finance can play a role in addressing the high levels of poverty in the Organisation of Islamic Cooperation countries, “which account for over 40% of those living on less than US$1.25 a day and is home to one-third of the global population living in extreme poverty, defined as those living on less than US$1.90 per day.”

The annual conference was jointly organised by the SC, World Bank Group Global Knowledge and Research Hub in Malaysia, and the International Organization of Securities Commissions Asia Pacific Hub.

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