Following the attacks on 11 September 2001, all things Islamic came under a cloud of suspicion, and Islamic finance and Islamic banks were certainly no exception. Discrimination against Muslims increased significantly following the September 11 attacks, with Muslims stereotyped as violent and prone to terrorism without any opportunity to rebut. In 2013, Brunei itself was targeted and severely condemned by Western media merely for declaring that Brunei chooses to apply Islamic law.
There are around 1.3 billion Muslims in the world, and that means that one out of every five or six people on the planet is Muslim. However, the equity and wealth shared by Muslim communities is just around 4 percent and many Muslim countries such as Indonesia, Bangladesh, Afghanistan and Pakistan are largely poor with no media power. Furthermore, almost all of the eminent media is owned and controlled by Western countries with much of it significantly contributing to the negative perceptions and images of Islam that have become so commonplace. A case study of American network news coverage post 9/11 supported the view that objective coverage of Islam is a myth, not just in America, but also around the world.
Muslims, especially those from the Middle East, are almost always portrayed as terrorists with the intention to kill the innocent populations of Western countries in Hollywood movies. As a consequence, hatred towards Islam and Islamophobia are on the rise. Mosques in various places have been defaced and burned and Muslims are treated suspiciously, especially those trying to adhere to the Islamic dress code. Requests have also been made by some politicians to refuse citizenship to followers of Islam.
Applications to build non-Islamic places of worship have typically been freely granted, but applications to build mosques have become sensitive and many have been rejected. Therefore, it is not surprising that the negative perceptions towards Islam which generated strong hatred for Muslims have contributed to the various attacks on Islamic finance, many of which have been based on prejudice and bias. Virtually every work in the abundant ‘secrets of terrorist financing’ literature has alleged that the purpose of Islamic finance is to fund terrorism.
One of the National Security Adviser during Bill Clinton’s second term and the top official in charge of the surveillance of Bin Laden’s networks at the time, alleged that “it would be difficult to track down Osama Bin Laden’s money because it was hidden in ‘underground banking, Islamic banking facilities. ”28 Blanket accusations that Muslims are terrorists, or even violent people, are unwarranted and unjustifiable, but that has not stopped individuals from insisting that Islamic finance should be discouraged because ‘terrorists might use it’.
Conflicting logic plagues these accusations because real terrorists do not want their money to be easily identifiable and would definitely shy away from Islamic finance, which is subjected to a great deal of scrutiny from the authorities. Those involved in terrorism are more likely to receive their funding from other sources including piracy, money-laundering and secret donations and it would be highly counterintuitive to attempt to use Islamic finance for such activities.
Despite this discrimination, in the years following the September 11 attacks, the Islamic finance industry did not crumble and collapse. Instead, it experienced dramatic growth and major transformations while progressively shifting to better products. Criticisms and condemnations of Islamic banks were no doubt a motivating factor in the serious efforts to standardize, rationalize and streamline Islamic finance. Blanket discrimination against Muslims and Muslim countries, particularly those in the Middle East, have also contributed to the development of Islamic finance in certain jurisdictions such as United Kingdom and Southeast Asia, particularly Malaysia because some wealthy Muslims and Muslim countries decided to diversify their wealth outside Western countries due to the prevalence of poor treatment and negative perceptions.
Furthermore, the risk that their assets might be unfairly frozen merely because they were Muslims also contributed to the shifting of assets and investments outside Western countries. Islam is one of the most misunderstood religions and its negative portrayal in media and much of society has been detrimental to the development of Islamic finance.
According to the 2009 survey on religious attitudes, a shocking 58 percent of the Americans interviewed agreed that Muslims face more discrimination than any other religious group in the United States but claim that Muslims deserve it.
With a proper strategy for improving the relationships between Muslims and non-Muslims in place and a more efficient use of the media to reduce negative perceptions, it is possible to ensure a brighter future in which kindness and mutual understanding leads the way. Due to the strong and systematic bias and discrimination in the West towards Muslims, especially those from the Middle East, many wealthy investors and Middle-Eastern Muslim countries are looking for alternatives. This has contributed to the growing Islamic finance market outside the United States. Furthermore, non-Muslim investors have also contributed to this expansion with the market for sukuk increasing from close to zero in 2001 to US$100 billion in 2007, in part because non-Islamic investors have acquired a substantial percentage of the sukuk market.
Brunei entered the Islamic finance sector around 1993. The Islamic finance sector accounts for 40 percent of the total banking market in the country. Islamic financial products already play a defining role in the domestic economy, with Shariah-compliant banking holding around half (40 percent) of the market share and a total forecast of between 55 and 60 percent in the next five years. The performance of the Sultanate’s Islamic banks compares favorably to that of its neighbors’. The segment, for instance, holds a 20 percent market share in Malaysia, widely seen as an international leader in Islamic finance, and accounts for just 2 percent of financial services in Indonesia. By becoming a regional center for shariah-compliance wealth management, Brunei would also set itself as Islamic financial hub. However, to do this, the policy should not focused solely on domestic needs. There should be a good a balance between domestic needs and global interest
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