ISLAMIC FINANCIAL MARKETS CONGRESS
8 NOVEMBER 2019
MÜSİAD HEAD OFFICE
Esteemed President of the European Academy of Islamic Finance and Economics, Honourable Secretary General of the World Federation of Muslim Scholars, Esteemed Founding President and President of the IBF,
My Esteemed Teachers,
Esteemed Members of MÜSİAD,
Esteemed Representatives of the Business World,
Esteemed members of the press,
Ladies and Gentlemen,
At the Islamic Financial Markets Congress, held today for the second time, I greet you with the greeting of God; As-salamu alaykum wa rahmatullahi wa barakatuh…
Welcome, you have graced us with your presence.
First of all, I pray that this blessed day, the anniversary of the honoured arrival in this world of our Prophet, the master of the universe, may be abundant and full of blessing. I congratulate you both on our blessed Friday and on your Mawlid al-Sharif, and, for the sake of the intercession of our master who was sent as a mercy to all the worlds, I beseech our Lord that, together with the felicity of both worlds, He grant
blessing upon our lives, our sustenance and our health, and that He make us among the servants with whom He is pleased.
Distinguished Guests,
Given the main theme of our congress, with your permission I would like to make a brief assessment regarding Islamic finance and financial markets. Islamic finance, whose applications in the modern sense go back to the 1960s, has reached significant dimensions within the global economy. If I am to make a brief assessment without overwhelming you with figures:
Today the Islamic finance sector has a size of approximately USD 3 trillion.
With Islamic banks and their instruments, and with applications such as sukuk and takaful, Islamic finance holds a most significant position for Muslim societies.
While sukuk, takaful and other interest-free financial institutions and funds make up approximately %30 of the sector's assets, the remaining %70 is covered by Islamic banks.
In Türkiye as well, participation banks, which increase their share of the sector with each passing day, raised their share of the banking sector to %5.3 in 2018. In this period the net profit of participation banks rose by %34.1 to above TRY 2.1 billion, while their total equity increased by %23 to approximately TRY 17 billion.
The Islamic finance sector, whose global size is expected* to reach USD 4 trillion by the end of 2020, is expected to rise rapidly to far higher levels in the years ahead. Therefore, in order to increase the potential of Islamic finance, its existing infrastructure needs to be developed.
The existence of regulatory and supervisory institutions for the sector will play an important role in the growth of Islamic financial institutions. Increasing the sector's visibility and developing the existing market depend on diversifying products and offering new instruments with high added value.
Setting standards to ensure that the instruments of the interest-free finance system comply with Islamic finance principles is also very important. In addition, the development of the system is linked to increasing education, knowledge and awareness in the field of interest-free finance.
In this context, in 2017, the year I took office, we held an event under the name of the Humane Finance Summit, with 75 panels and 220 speakers. This summit
played an important role in the spread of multi-partner and interest-free models in the world and in Türkiye.
It is an important development that the number of institutions providing education on interest-free finance in the world today has reached approximately 700. Moreover, it is striking that England ranks first on this list with 80 institutions.
This means that the Islamic finance sector constitutes an important alternative not only for Muslim societies but also for societies outside the Islamic world.
Because the shocks and crises experienced by the global financial system accelerate the efforts of global capital to seek alternatives. While the global crises that have occurred have caused a serious change in the perception of the conventional banking sector, Islamic banks, thanks to their own dynamics, have managed to weather the global crisis in relatively sounder condition. In times of crisis, traditional conventional banks holding risky assets may face liquidity difficulties. Islamic banks do not experience liquidity problems because they stay away from such risky assets. Thus, after the crisis, Islamic finance has become an alternative not only for investors in the Islamic world but for other investors as well.
Distinguished Guests,
Today companies no longer aim at profit alone; they have come to concern themselves with many of society's social, cultural and political problems.
When we look at Islamic history, we see that economic formations such as the “Akhi tradition and futuwwa” operated with a similar sensitivity.* Since the day we took office, we have been stating that the building of an interest-free financial system is indispensable.
Because we see the current system as the greatest obstacle to making sustainable the commercial relations we have built with a thousand and one difficulties.
At this point, as MÜSİAD, we put forward projects unique to these lands and through which we can convey our values, not only in terms of financing but also in terms of the way they operate.
We see the spread of the culture of partnership as one of the most important of these projects. The spread of partnership, which has its place in our tradition of commerce, will to a great extent free the business world from the grip of interest.
As you know, partnership is becoming the alternative to our business people taking on the burden of interest in order to shoulder an investment on their own.
This is a matter that eases the entrepreneur's hand with regard to the steps to be taken in trade in the period ahead and that enables them to move in a freer space.
In the Renewal Process we have launched as MÜSİAD, we focus on projects in order to bring solutions to the problems we have identified in trade.
With our SAHA Structure, by ensuring the integration of domestic and international structures, we aim to expand our members' trade, investment and partnership opportunities.
Likewise, the Partnership and Coordination High Board that we have established is also carrying out work in this direction to open new horizons for our members.
Through the events we organize, we also carry out many activities that will contribute to the development of our trade, foremost among them the culture of partnership.
In this respect, I consider our International Business Forum (IBF), whose 23rd edition we held in Bosnia and Herzegovina on 16-19 October, to be extremely valuable.
We see that the IBF brings together the business people of 25 countries with the same goal and the same belief.
Therefore this umbrella plays an effective role in ensuring an accurate and rapid flow of information among members and in the processing and transformation of that information.
In doing so, it also contributes to the development of the commercial activities of our members and of our friends who act in line with the same goal as ourselves.
Esteemed Guests,
Today all economic activity takes place on the basis of knowledge.
Knowledge, as the sum of filtered, important and valuable data, is a resource necessary for taking sound decisions.*
Processes such as the acquisition, processing and transformation of knowledge are accepted as the essential element of the economic system.
This has become a very important strategy for countries at the macro level and for companies at the micro level.
Today, only those countries or companies that succeed in making use of the knowledge they acquire can increase their gains. In this way they rise to a position of leading the others.
In other words, economic power is gathered in the hands of those who possess knowledge.
Therefore, the acquisition of commercial, technological or financial knowledge and the gaining of an advantage in matters such as investment, R&D, production and competition is an issue we must address in earnest.
This process, which we may describe as an economic information network, means the transfer of the most accurate and most useful information at the most appropriate time.
Today, when we feel the impact of trade wars more with each passing day, the flow of economic and commercial information is more important than ever.
The fierce competition in global trade is pushing all actors to take a number of measures.
For this reason, while trade and technology wars continue among the world's major centres of power, we too must analyse well what we need to do and take action as soon as possible.
As MÜSİAD, we serve today with 225 contact points abroad and 312 in total.
In order to sustain and carry forward the flow of economic information, we continue to expand our organizational network.
Today and tomorrow, at this event which I consider extremely important, we will witness strategic and up-to-date contributions concerning Islamic markets.
In the sessions that will proceed under different headings, the obstacles facing the business world in this field, which is among our priority markets, and proposed solutions to them will also be addressed.
The congress also offers the opportunity to establish relations with financial markets, banks, financial institutions, companies, universities and experts from different regions of the world. In this respect too, I would like to say that I find it very valuable.
I hope that the congress will be a means of goodness for our business world and our countries, and I extend my thanks to my brother Ahmet Matar in the first place, to the European Academy of Finance and Islamic Economics and to everyone who contributed to the organization.
As representatives of the business world, I hope that we may come together more often on such fine occasions, and I greet you all with respect and affection.
Abdurrahman Kaan
President of MÜSİAD
*Estimate of the General Council for Islamic Banks and Financial Institutions
*Company Structure and Continuity - Enver Osman Kaan
*Company Structure and Continuity - Enver Osman Kaan