In Malaysia’s current financial services landscape, Islamic banking is more often than not a sub-set or a subsidiary to conventional banking. True Islamic FSIs have to be truly independent from conventional banking institutions to avoid any questions about their halal status.
Our body is like a container. It is clean only when we put clean things into it. If we fill it with tainted things, it will definitely become dirty. Everything that we put into our body has an effect on it. It determines how we live and what we are — either positive or negative.
Take, for example, the food we eat. People commonly say “you are what you eat”, and the food we digest becomes our flesh and blood.
Think about it. If we feed our body with sugar-laden food, how will our body turn out? If we feed ourselves with the best and the purest food and, in the process, it helps us to be the best that we can be, is it not in our interests to do so? I believe this is a universal concept that everyone can accept.
Take another example. If we feed our mind mostly by reading about how to achieve internal happiness and calmness, will we not become sharp and focused on this subject? This rings true with almost everything we choose to consume; news, television, music, to name a few. What we feed our mind will become food for our soul. What we do with conviction becomes our commitment.
Now, let us apply this to the Islamic concept of halal, which means permissible. It covers objects and actions that conform to certain principles. When it comes to food, humanity is expected to eat, use and act in accordance with what is not only permissible (halal) but also good, pure or wholesome. Halal requirements are stringent, and in the case of the food sector, I dare say that the halal standard in the aspect of food safety is the highest.
However, most people only associate halal with the prohibition on eating certain types of food, such as pork and dog meat, and drinking alcohol, but the halal standard also applies to both product and the process of preparation. The “No Pork” or “No Lard” signs at eateries do not mean the food served is halal. Such signs are meaningless when the full process of halal is not adhered to. Halal also encompasses safety, animal welfare, social justice and a sustainable environment. Consumers who are truly concerned about safety and a healthy lifestyle should, therefore, readily accept the wholesomeness concept of halal regardless of faith.
The opposite to halal is haram (not permissible). The principle of halal and haram in Islam is very clear. Halal-haram is binary. There are no 50 shades of gray in between. It is either black or white — it is either halal or haram. We cannot say this product is more halal and that product is less halal. When something is haram, we must have enough conviction to say that it is haram. Likewise, committing ourselves to consuming what is purely halal also requires conviction.
Halal-haram also concerns both direct and indirect consumption. Direct consumption means things like food that we buy and eat. Indirect means the source of funds that we use, for example, to buy food to feed ourselves and our family. If we get money from gambling and use it to buy food, then the food is not halal because the proceeds from gambling are not halal.
Speaking of sources of funds, financing products for Muslims can also be halal or haram. Financial service institutions (FSI) now offer two types of banking services — conventional banking and Islamic banking. Conventional banking involves, among others, financial products based on usury whereby money is lent at interest. Usury is haram in Islam.
In Malaysia’s current financial services landscape, Islamic banking is more often than not a sub-set or a subsidiary to conventional banking. What does this mean in so far as the halal factor is concerned? It means the halal status of the financial products can be disputed because the source of funds to establish Islamic banking within the usury-based conventional banking operation is in itself questionable. True Islamic FSIs have to be truly independent from conventional banking institutions to avoid any questions about their halal status. Therefore, there is a call for FSIs to set up truly halal Islamic banking that is not tagged to the platform of conventional banking at all.
Halal is not limited by geographical boundaries. Halal is borderless. It is absolutely strange when a financial product is deemed halal only in Malaysia but not in other countries. A purely halal financial product must be unquestionably accepted globally. It must transcend borders and be readily accepted without any doubt and argument. This substantive pain point gives rise to tremendous opportunities for entrepreneurs.
Let us take As-Sidq as an example. A made-in-Malaysia financial trading platform, As-Sidq is certified by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), based in Bahrain, and the International Shari’ah Research Academy for Islamic Finance (ISRA). As-Sidq, an Arabic word that means “the truth”, satisfies the strict requirements based on Middle Eastern shariah regulations, making it the only fully shariah-compliant Islamic personal financing product in the world today outside the Middle East. It is one of the most in demand platforms among Islamic FSIs at the moment.
The rest that is available today is what is called the result of “best efforts” only — efforts to comply with shariah. This is where the problem lies. It is not halal in the real sense because the purpose and platform of establishing the product are questionable. True Muslims care about the food they put in their mouth as much as they care about the money used to buy that food. Because of this, they will go out of their way to find and only consume what is truly halal, even if it is available only at a premium price.
Practising Muslims are willing to pay a certain amount when they find that it is worthwhile to pay for a truly halal product. There are a huge number of Muslims who will not use products that are not fully compliant. There is also the potential that a certain percentage of other Muslims would migrate and be fully compliant. With increasing demand for Islamic banking products and services, only then will they become more cost-effective.
Consumer behaviour on accepting only truly halal will eventually push FSIs to meet their demand. Therefore, financial service providers must have an equal commitment and take the responsibility to provide truly shariah-compliant financial products and services, and not just camouflage these as halal within the haram conventional setting.
Such a scenario today also requires the body tasked with pushing the halal agenda, such as the Halal Industry Development Corporation, to focus on the development of a true halal standard, audit and certification. There may even be a need to set up a new body to set the bar for halal best practices in Malaysia or the world and to further build capacity for the development of the halal standard globally. And that is the truth.
Datuk Azrin Mohd Noor is the founder of Sedania Group, an innovator, author and IP expert