|
Use
Islamic Banking to Avoid Debt-Slavery: Mahathir
 |
|
“The
means and systems are there. It is for us to decide whether we
should apply our wealth in accordance with our religion or not,”
Mahathir
|
DUBAI,
May 16, 2005 (IslamOnline.net & News Agencies) - Former Malaysian
Premier Mahathir Mohamad has urged Muslim countries to develop Islamic
banking institutions and create non-usurious sources of funding.
Addressing
an Islamic finance conference in Dubai Sunday, May 15, Mahathir
cautioned that countries borrowing from usurious foreign banks and
institutions such as the International Monetary Fund (IMF) and the
World Bank risk becoming “a kind of debt-slave to the lenders,”
reported Bernama news agency.
He
said that some poor debtor countries use up to 85 percent of their
revenues to pay the loans.
Mahathir
said that to ensure payments international agencies such as the IMF
would “literally take over the management of the country's
economy”.
The
former premier asserted that governments should first look at
interest-free sources in their quest for project financing.
He
also called on rich Muslim countries to “consider their duty to
provide Islamic banking facilities to save Muslims from any form of
debt-slavery.”
Taking
a dig at the huge US foreign debt, Mahathir said if a country is
powerful, then it can “go on spending borrowed money” without
worrying about defaulting repayments.
“You
don't have to pay because your lenders dare not bankrupt you. The US
is not in trouble despite owing the world US$8 trillion. If it is
bankrupted, it and the lenders would lose all their money.”
Will
Needed
The
former Malaysian premier said Muslim countries currently need the
political will to develop their Islamic financial institutions.
“The
means and systems are there. It is for us to decide whether we should
apply our wealth in accordance with our religion or not,” he said.
Mahathir
went on: “There is no reason why Muslims and Muslim countries cannot
have access to Islamic finance for whatever needs. The skills in the
management of Islamic banking have already been developed”.
Islamic
finance experts believe that many Muslim countries are still not ready
to create legal frameworks for the Islamic banking industry, which is
growing in popularity among the peoples and has witnessed phenomenal
growth, according to Bernama.
Mahathir
said he would not “pass any judgement on anyone if such facilities
are not available in Islamic countries.”
He
maintained that Islamic banking “has developed new instruments in
order to compete with usurious banking and to provide better
alternatives. As a result Islamic banking has become more
attractive”.
The
Islamic banking industry, which began almost three decades ago, has
made substantial growth and attracted the attention of investors and
bankers across the world.
Growing
at an estimated 15 percent annually, the Islamic finance market is
currently estimated to be worth more than $300 billion with more than
200 Islamic finance institutions operating worldwide.
Islamic
Bond Fund
In
a related development, Malaysian Second Finance Minister Nor Mohamed
Yakcop said Monday that the Organisation of Islamic Conference (OIC)
and the Islamic Development Bank (IDB) should include Malaysia's
proposal for the development of an Islamic Bond Fund in their agendas.
“We
need to develop the bond fund to avoid the 'gaping mismatch' between
long-term projects and the availability of short and medium term funds
in the conventional market,” he said.
The
IDB and OIC should take a leaf from ASEAN's endeavour in developing a
bond fund with Japan, Korea and China, the official said.
Nor
Mohamed said ASEAN was very much aware of the need to have Asian Bond
Fund and this good idea could be emulated by the Islamic side.
East
Asian economies suffered a credit crunch during the crisis as it
lacked funds to haul itself out of the financial malaise brought about
by currency crisis.
The
development of a bond fund would help reduce Islamic countries'
dependency on expensive bank borrowings and gain access to more
competitive financing.
|
