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GIUF’s Reaction to Budget 2023

The Global Islamic Unity Forum (GIUF) congratulates YAB Prime Minister Datuk Seri Anwar Ibrahim on his presentation of Budget 2023 in Parliament today.

GIUF considers the budget to contain bold measures to overcome inflation and its attendant high cost of living whilst maintaining growth during global uncertainty.

The commitment to taking 130,000 hardcore poor out of poverty by 2023 is unprecedented. It is a step that both sides of the Parliament must support. The same goes for releasing 260,000 persons from bankruptcy under the Insolvency Act. Many are business people who are unfortunate to have fallen in bad times. Their talents could be rejuvenated and put to productive use.

GIUF also welcomes the effort to establish “Wakaf Madani” involving assets worth more than RM 1 billion. This will pave the way towards mobilizing wakaf in poverty eradication through microfinancing without interest. Depending on the nature of these assets, mobilizing wakaf will be a boon for small businesses with no access to credit and preyed upon by predatory lenders.

GIUF has identified wakaf in our strategic roadmap for the alleviation of poverty. We will
keenly follow the development of “Wakaf Madani” and offer our expertise to the government.

It was also timely for the Prime Minister to offer a critique of Islamic finance with a greater
emphasis on economic justice and a healthier manifestation of risk-sharing between lenders and borrowers. Mudarabah financing as a form of profit and loss-sharing Islamic contract has waned significantly compared to other debt-based contracts. It is also ironic because mudarabah is still the sine quo non in the capital formation of Islamic banks.

Experts in Islamic finance in GIUF believe that advances in econometrics and blockchain
should be applied to resolve the so-called moral hazard in mudarabah contracts. Risk
assessment of Islamic banking products was developed in the early days of Islamic finance and could have been outdated. A review of this will erase an anomaly that is impeding advancement in wakaf and the introduction of short-term sukuk in manufacturing, mining, construction, and microfinancing of small businesses.

 The political audacity could also be seen when the Prime Minister announced the cancellation of contracts linked to direct negotiations pursued in the latter part of 2022, including flood mitigation and Jana Wibawa. This announcement will validate a core Madani principle less than four months before the state elections.

Dato Rahim Kamil Sulaiman
Global Islamic Unity Forum (GIUF)

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