TOWARDS A COMPREHENSIVE DEVELOPMENT OF ISLAMIC FINANCE

Islamic Finance which is an offshoot of Islamic economics has seen a more aggressive development than its parent in the last five decades. Islamic economics itself has been quite stagnant given the enthusiasm in building institutions such as banks, takaful companies, capital markets, and structuring products based on the Islamic contracts for such institutions. Many countries have joined the bandwagon to significant level of success, measured in terms of asset size, revenue, profitability, market share, etc. Whilst Islamic economics has still not completely departed from its conventional counterpart both theoretically and empirically, Islamic finance seem to suffer similar fate mimicking its conventional institutions and products at the risk of being considered unIslamic. Although many scholars and industry experts realised these serious shortcomings, attempts to bring about changes that would suit the fundamental needs of Islam as a complete way of life are at best sporadic and may even take a long time to succeed. This paper attempts to achieve two main objectives. Firstly, it outlines the comprehensive development of Islamic Finance based on the Malaysian experience, taking advantage of observed shortcomings through hindsight. Secondly, it will propose the required preparations towards achieving the first objective and at the same time suggest changes that need to be done to the present system to achieve the comprehensive Islamic Finance system