Islamic Wealth Management Landscape and Overview of Corporate Waqf By Dr Shamsiah Abdul Karim SVP Bank Muamalat Malaysia Berhad LIBFC MASTERCLASS Islamic Wealth Management Sime Darby Convention Centre 24 TH October 2018
Content • Islamic Wealth Management Landscape • Overview of Corporate Waqf
3 Background ISLAMIC WEALTH MANAGEMENT & MAQASID SHARIAH Islamic Wealth Management in its holistic manner entails services which are in line with the 5 foundational goals of Maqasid al-Shariah which places the importance in preservation of:
4 Background MAQASID SHARIAH Islamic scholars in Islamic finance have attempted to elaborate on the objective of wealth and financial transactions and a contemporary Islamic scholar (Laidin) postulates 5 objectives which are: Continuity of Continuity of Achieving Financial Validation of the the comprehensive transparency financial circulation of investment of communal ownership wealth wealth prosperity
5 Background The GABV journey… Bank Muamalat Malaysia Bhd joined the Global Alliance for Banking on Values (GABV) network as the first Islamic bank in the world in January 2018 Being an Islamic bank, Bank Muamalat carries greater responsibilities to influence social change and creating values to the people, over and above its usual profit oriented banking activities
Islamic Wealth Management Landscape • As the global Islamic fund and wealth management sector continued to experience growth due to the increasing affluence of Muslim communities who wish to invest surplus funds in a Shariah- compliant manner and non-Muslim investors’ wish to diversify their investment through Shariah-compliant funds, more innovative and comprehensive products and services are being offered. One such possibility is through Islamic Wealth Management (IWM).
Islamic Wealth Management Landscape
Islamic Wealth Management Landscape
Islamic Wealth Management Landscape Gross domestic product (GDP) of the member countries of the Organisation of Islamic Cooperation (OIC) is forecast to grow by 4.1% on average, outpacing the world average of 2.6%, while Muslims are projected to represent 26% of global population in 2030 from 23% in 2016 . It is also projected that Muslims will represent 27.3% or 1.3 billion population in Asia-Pacific where, by 2030, the majority of the world’s middle class will be living in the Asia Pacific region
Islamic Wealth Management Landscape Malaysia’s operates within a well-established and facilitative regulatory environment based on principles of securities regulation which are aimed at ensuring protection of investors, maintaining fair, efficient and transparent markets, and reducing systemic risks. The regulatory framework is further complemented by Shariah governance Establish Malaysia as a Strengthen Malaysia’s regional centre for positioning as a global Shariah-compliant hub for Islamic funds sustainable and responsible investment Develop Malaysia as an international provider of Islamic wealth management services
Critical Success Factor for Islamic Wealth Management (Going Borderless) Digital branch, minimum teller, virtual Teller after Traditionally bank branches are working hours, face recognition and retail shop concept filled with tellers and counters Long queue are formed and Coupled with formidable cyber banking facilities, require intensive manual labor to customers are now able to perform many transactions fulfill daily transactions online and has reduced the dependencies on actual tellers
Islamic Wealth Management- Going Holistic Financial Example: Creates joint ownership Fairness and togetherness under the concept of Takaful. Profit sharing under mudharabah and etc Investments Better Risk Islamic Able to meet Reward Wealth Inclusiveness both Muslim’s are Relationship Management approached and non- Muslim’s cautiously and the decision- financial needs making eliminating process is financial borders carried out and boundaries thoroughly Restrict non shariah Ethical investment i.e. into alcohol, tobacco, gambling which are harmful given any religion
BMMB IWM Cycle BMMB IWM Cycle Gold Regular Family Takaful, General Proposal Wealth Takaful and Unit Trust Creation Wasiat Childhood (AS-Salihin & ARB) Empty Nester Young Adult Wealth Wealth Distribution Accumulation Unit Trust Gold ASNB Parenthood Adult Wealth Wealth Purification Protection Non-Financial Family and General Services & Takaful Wakaf
Corporate Wakaf Model • Traditionally waqf are managed by Govt entitiy. Example in Malaysia the waqf is governed and manage by the Majlis. Juxtapose with Trust it is set up by the Trustee • 1) Corporate wakaf – Waqf set up as a corporate entity • Labuan waqf foundation has created such legislation and creation of waqf to mirror the corporate nature of running a waqf. • 2) Corporate waqf – create waqf out of the profit received. • 1) As a corporate entity – eg hospital waqf , university, etc • 2) The bank currently is creating waqf out of its profit and facilitating the collection and management of waqf with collaboration with Majlis Agama.
Bank Wakaf Model
Wakaf Selangor Muamalat – Governance Structure MAJLIS AGAMA ISLAM SELANGOR (MAIS) JAWATANKUASA PENGURUSAN BERSAMA (JPB) SETIAUSAHA PENGERUSI YBHG TAN SRI DATUK SERI PANGLIMA DR DATO HJ MOHD REDZA SS DATO’ SETIA MOHD ABDUL RAHMAN ARSHAD SHAH ABDUL WAHID TAMYES ABD WAHID (ALP PWS & MUFTI SELANGOR) (CEO, BMMB) YM DATIN PADUKA UNGKU TN HAJI AZIZI BIN CHE SEMAN ARFAH UNGKU TAHIR (PENGERUSI JAW SHARIAH (ALP PWS) BMMB) EN ANUAR HAMZAH TN HJ. MOHD HAFIZ FAUZI TOHAR (KETUA JAB. DAKWAH (TIMB CEO, PWS ) WAKAF & ZAKAT, BMMB ) 16
JPB Terms of Reference Terms Reference i. Enacment Majlis Agama Islam Negeri ( Selangor ) Governing ii. Islamic Financial Svs Act ( IFSA 2013) Authority i. JPB to call for periodical meeting ; Roles and ii. Authorise to make decision based on 2/3 quorum; Responsibility iii. Given the authority to create policy with regards to of members of WMM fund; JPB iv. Authorise to implement policy or decide on any matters relating to the collection, disbursement and usage of the fund v. Authorise to supervise on the cash flow of funds; and vi. Responsible to MAIK – to inform and receive instructions.
Bank Muamalat Wakaf Model contribute Mauquf Hospital Investments Computers Infrastructure Equipment Properties Shariah Compliant Investment Rentals, Usage Usage Usage dividends
Allocation of Funds MYR 24M – as at Aug 2018 Allocation Health Education Poverty alleviation Investment
Investment – Sustainability issues • The waqf needs a sustainable income for its beneficiaries Rental Mauquf (Capital) Dividend, returns Mauquf Alaih ( beneficiaries )
Waqf beneficiaries • Beneficiaries hit 3 sustainable UNDP goals • Health • Education • Poverty through economic and social empowerment programme
Collaboration with Hospitals Collaboration with Community Prevention , medical intervention and after care Medical Prevention After care Intervention Dialysis machine Mobile clinic Recovery, Hospice Amputation wad Health screening Burial
Syukran and Wassalam
Disclaimer This presentation should not be regarded as offering a complete explanation of the matters referred to and is subject to changes in law. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Labuan IBFC cannot accept any responsibility for loss occasional to any person acting or refraining from action as a result of any material in this presentation. LABUAN IBFC INC SDN BHD IS THE OFFICIAL AGENCY ESTABLISHED BY GOVERNMENT OF MALAYSIA TO POSITION LABUAN IBFC AS THE PREFERRED INTERNATIONAL BUSINESS AND FINANCIAL CENTRE IN ASIA PACIFIC 24
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