KUCHING: At a time when other global financial giants had succumbed to the pressure of August 2007 crisis, Islamic finance appeared to remain resilient. Above it all, Malaysia had emerged victorious.
Already a world leader in terms of ranking in sukuk (Islamic bonds) issuance,
the nation had in its command 57 per cent, or RM172 billion, of total bond issuance of RM301.7 billion.
Adding to this, Bank Negara planned to award two more banking licences to mega Islamic foreign banks with a minimum capitalisation of US$1 billion (RM3.09 billion) each – adding to its present three – as well as two takaful (insurance) licences.
Such achievements would be unheard of three decades ago, when the only likely reference to Islamic finance was the Pilgrimage Fund Board (Lembaga Tabung Haji, or TH). Still, such assumption was not far off the mark.
Initially devised in 1963 as a national economic scheme, TH incorporated one key aspect of any financial services institution: the provision of a deposit programme for pilgrims wishing to perform the ‘haj’ (ritual pilgrimage to Mecca) – the last of Islam’s five pillars. To date, the board’s total funds under management has reached RM23 billion, making it the world’s largest non-banking Islamic savings institution. “The average growth rate for TH has been in the double-digit since 2002,” said its chairman, Tan Sri Abi Musa Asa’ari Mohamed Nor in an online note.
“We have recorded net profit after ‘zakat’ (tithe) of over RM1 billion over the past four financial years in a row, beginning with RM1.1 billion in 2006,” he added.
Being a predecessor itself, TH had also ‘given birth’ to another financial pioneer: the nation’s maiden Islamic bank, Bank Islam Malaysia Bhd (Bank Islam) in July 1983.
From only RM80 million initially, the bank’s paid-up capital had swelled to almost RM1.73 billion as at June 30, 2010. Entailing this, the pioneering ‘lineage’ continued with the establishment of Bank Islam’s ‘takaful’ arm, Syarikat Takaful Malaysia Bhd (Takaful Malaysia) in November 1984 – the first Islamic underwriter in the country.