Islamic Wealth Management Landscape and Overview of Corporate Waqf By Dr Shamsiah Abdul Karim SVP Bank Muamalat Malaysia Berhad

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1 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

2 Content Islamic Wealth Management Landscape Overview of Corporate Waqf

3 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 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 the circulation of wealth Continuity of the investment of wealth Achieving comprehensive communal prosperity Financial transparency Validation of financial ownership

5 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

6 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 Shariahcompliant 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).

7 Islamic Wealth Management Landscape

8 Islamic Wealth Management Landscape

9 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 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

10 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 Strengthen Malaysia s positioning as a global hub for Islamic funds Establish Malaysia as a regional centre for Shariah-compliant sustainable and responsible investment Develop Malaysia as an international provider of Islamic wealth management services

11 Critical Success Factor for Islamic Wealth Management (Going Borderless) Traditionally bank branches are filled with tellers and counters Long queue are formed and require intensive manual labor to fulfill daily transactions Digital branch, minimum teller, virtual Teller after working hours, face recognition and retail shop concept Coupled with formidable cyber banking facilities, customers are now able to perform many transactions online and has reduced the dependencies on actual tellers

12 Islamic Wealth Management- Going Holistic Financial Fairness Example: Creates joint ownership and togetherness under the concept of Takaful. Profit sharing under mudharabah and etc Investments are approached cautiously and the decisionmaking process is carried out thoroughly Better Risk Reward Relationship Islamic Wealth Management Ethical Inclusiveness Restrict non shariah investment i.e. into alcohol, tobacco, gambling which are harmful given any religion Able to meet both Muslim s and non- Muslim s financial needs eliminating financial borders and boundaries

13 BMMB IWM Cycle BMMB IWM Cycle Proposal Wasiat (AS-Salihin & ARB) Empty Nester Wealth Distribution Wealth Creation Childhood Gold Regular Family Takaful, General Takaful and Unit Trust Young Adult Wealth Accumulation Parenthood Wealth Purification Adult Wealth Protection Unit Trust Gold ASNB Non-Financial Services & Wakaf Family and General Takaful

14 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.

15 Bank Wakaf Model

16 Wakaf Selangor Muamalat Governance Structure MAJLIS AGAMA ISLAM SELANGOR (MAIS) JAWATANKUASA PENGURUSAN BERSAMA (JPB) SETIAUSAHA DATO HJ MOHD REDZA SHAH ABDUL WAHID (CEO, BMMB) TN HAJI AZIZI BIN CHE SEMAN (PENGERUSI JAW SHARIAH BMMB) TN HJ. MOHD HAFIZ FAUZI (KETUA JAB. DAKWAH WAKAF & ZAKAT, BMMB) PENGERUSI YBHG TAN SRI DATUK SERI PANGLIMA DR ABDUL RAHMAN ARSHAD SS DATO SETIA MOHD TAMYES ABD WAHID (ALP PWS & MUFTI SELANGOR) YM DATIN PADUKA UNGKU ARFAH UNGKU TAHIR (ALP PWS) EN ANUAR HAMZAH TOHAR (TIMB CEO, PWS) 16

17 JPB Terms of Reference Terms Governing Authority Roles and Responsibility of members of JPB Reference i. Enacment Majlis Agama Islam Negeri ( Selangor ) ii. Islamic Financial Svs Act ( IFSA 2013) i. JPB to call for periodical meeting ; ii. Authorise to make decision based on 2/3 quorum; iii. Given the authority to create policy with regards to WMM fund; 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.

18 Bank Muamalat Wakaf Model contribute Mauquf Investments Computers Infrastructure Hospital Equipment Properties Shariah Compliant Investment Rentals, dividends Usage Usage Usage

19 Allocation of Funds MYR 24M as at Aug 2018 Allocation Health Education Poverty alleviation Investment

20 Investment Sustainability issues The waqf needs a sustainable income for its beneficiaries Rental Mauquf (Capital) Dividend, returns Mauquf Alaih ( beneficiaries )

21 Waqf beneficiaries Beneficiaries hit 3 sustainable UNDP goals Health Education Poverty through economic and social empowerment programme

22 Collaboration with Hospitals Collaboration with Community Prevention, medical intervention and after care Prevention Medical Intervention After care Mobile clinic Health screening Dialysis machine Amputation wad Recovery, Hospice Burial

23 Syukran and Wassalam

24 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