1. Globalisation of Islamic Finance: The Road Ahead
Brunei Darussalam Islamic Investment Summit (BIIS 2017)
Globalisation of Islamic Finance: The Road Ahead
Date: Tuesday, 01 August, 2017
Time: 3.00 – 4.00 pm
Venue: Indera Samudra
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2. change – become different in essence and losing its original nature
Democratising Capital for Community Development, Crowdfunding and Wakaf
Focus of this presentation is on crowd-sourced funding for micro-businesses
(1) “democratise”
change – become different in essence and losing its original nature
modify, to cause a transformation
In our instance, democritisation of the channels of availing finance through
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3. * from who - non-traditional entities – appealing to the masses
* how - effecting transformation of the means – unorganised social media crowdfunding or organized-regulated platform;
* from who - non-traditional entities – appealing to the masses
(2) What is it
it is not new, probably hundreds of years old and older if we look at it as a form of collectivization or ‘gotong-royong’ (community self-help to carry out a task)
investors ‘fork-out’ money at any stage in an enterprise
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4. whether with ownership in business, profit-sharing, others
(3) Why “democratization” via this channel
like everything else today, borrowing and raising capital need to change to keep pace with technology
micro-business neglected for a long time can appeal to masses - let masses decide (should there be monopoly or cartel in finance) – new opportunities
banks are known to be more risk averse
micro-investors can participate in small amounts
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5. reduce government burden
(4) Objectives of Micro-Crowdfunding
preponderance of micro-businesses and these can do with some help
provide basic investor protection via government regulatory “checks and balances”
give altruistic a more organized venue to contribute
give small investors a chance to participate
can assist in diversification of economy
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6. opportunity for micro-businesses to maintain and grow trial and error
(5) Regulatory support for change
Aim is not full “democratisation” but reduced regulatory intervention (maternalistic [low-level], not paternalistic [high-level])
micro-business crowd-sourced funding need legislation that
acts as catalyst for change in the way capital is raised
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7. (6) Regulatory change can include area of Simplified
encourage the change
strike-a-balance between “over-regulation” and “free-for-all” – emphasis on more friendly regulation
i.e., simplified regulatory requirements (as opposed to higher-levels compliance)
(6) Regulatory change can include area of
Simplified
disclosure requirements
business plans
risk warnings and acknowledgement statements
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8. standardization of investment documentation
reduced accounting requirements
reduced costs of compliance
permitting secondary offers
(7) Other legislative changes
changes in partnership law to –
‘ring-fence’ crowdfunding investors from full liability as a partner
allow more than 20 partners
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9. allow investments in modalities (securities) other than shares
others
(8) Syariah applications
many micro-businesses are conducted by Muslims who may prefer Syariah compliant fundings
Islam encourages trading and investments
various Syariah common concepts can be employed to raise capital
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10. examples include, musyarakah, mudharabah, wakalah, murabahah
Syariah advisory body of Platform Operator assist to provide issuers –
* standardized documentation for Syariah concepts
* basic Syariah advisory services
* assistance with ‘on-going’ compliance
* assistance with issues and questions
all at a reasonable fee
Platform Operator can seek Syariah Financial Supervisory Board approvals for various types of documentation.
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11. (9) Ending remarks
change bears multi-faceted risks, can attempt to mitigate and manage risks
platform operator can take on a limited role as “supervisor” on behalf of investors (for a fee)
regulators can assist by making ‘random-checks’ on site in addition to requiring period reports
micro-businesses require minimal capital thus, gross standardization and regulatory minimalisation called-for
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12. to avoid haphazard ventures and to adequately manage risks, specific businesses can identified for hosting on platform (ones that the platform is familiar with) (don’t go where angels fear to tread)
create public awareness of the existence of micro-businesses crowdfunding platforms, for both issuers and investors, Government can assist with advertising and hosting awareness programmes.
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13. Thank You by: Muhd Jamil Abas Bin Abdul’ Ali @ James Chiew Legal Advisor Diploma Syariah Law and Practice ABRAHAMS, DAVIDSON & CO.
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