Future of Shariah-based investment

A large section of Bangladeshi investors, particularly middle-income and retail investors, stay away from conventional investment instruments for religious reasons. Conventional mutual funds, bonds, or savings instruments may carry interest (riba) or may get invested in non-sharia-compliant sectors like alcohol or gambling. A vast pool of savings, therefore, goes untapped or invested in the off-book system. An injection of additional Shariah-compliant instruments like Islamic mutual funds, Sukuk (Islamic bonds), or Halal equity portfolios can mobilise this idle capital into the formal sector. Additionally, there is tremendous potential in mobilising the Bangladeshi diaspora, especially in the Middle East. Since billions of dollars are remitted to the country annually, offering these workers shariah-compliant, faith-based investment in their native country can tap formal investment.
However, there are some problems to be addressed. There are very few certified Shariah-compliant asset management products in the market as of today. Regulatory support is minimal, and investors are still not familiar with Islamic finance. There is also a lack of a centralised Shariah board to advise and certify investment products.
In order to create this environment, Bangladesh must have an overall strategy. First, regulators such as the Bangladesh Securities and Exchange Commission (BSEC) must sit with Islamic scholars and financiers to develop clear guidelines and a Shariah governance structure. Second, financial institutions must be encouraged to introduce innovative Islamic investment products to the market, either through tax concessions or regulatory ease. Third, awareness and education campaigns must be launched in order to create confidence and awareness among prospective investors.
Malaysia and Indonesia have demonstrated that, with appropriate policies, Shariah-compliant finance can draw both domestic and international investors. Bangladesh possesses the demographic, cultural, and economic basis to emulate their example. By adopting Islamic asset management, Bangladesh can render its financial system more inclusive, ethical, and investor-friendly.

Atikur Rahman
Student
BBA Department
North South University
atikur.rahman.nsuf@gmail.com