Highlights of an interview given by Dr. Abdul Iwanto in London during the January 2002 "World Conference on Islamic Finance: Thrusting into the 21st Century".
Q. Thank you for agreeing to be interviewed by us, Dr. Iwanto. Can I begin by asking what are your thoughts on globalisation?
A. Well, first of all I don't want to be associated with people who moan about globalisation and the IMF. I'm a progressive Muslim and I want to be liked by people in the West. Globalisation means the spread of Western culture and institutions. It's happening because people prefer those things over the alternatives. We have to realise that and adopt Western culture as quickly as possible. That's as true in finance as it is anywhere else. Credit card ... Islamic credit card. Mortgages ... Islamic mortgages. See what I mean?
Q. People sometimes criticise Islamic financiers for not supporting the Ummah. Do you think there is any truth in this, for example should they be financing more roads and hospitals, that kind of thing?
A. Not if it's easier to make money by starting an internet company and floating it on the stock market. Let's face it, if investors are prepared to pay such high prices for essentially worthless vehicles, then we should exploit that opportunity. Steiner argues this point very well in his ground-breaking paper of 1997, you can also read Golberg and Wolfowitz in The Journal of Financial Exploitation 1999 I think.
Q. It's interesting that you should mention the internet sector because of course that's where you rose to fame in Islamic finance ...
A. Yes indeed. I remember the meeting where they agreed to finance me. There must have been six or seven other people waiting in the corridor to make a presentation. One of them was trying to start a halal meat abattoir, another wanted to start a Muslim school. These chaps had really strong business cases, and they were really dedicated. All they needed was the money. But I was the lucky one. I convinced the investor group that with a 5 million dollar investment we could start our internet company and sell it on the NASDAQ for 50 million dollars within two years. Of course, I did stress the downside. For example, we wouldn't be developing the Muslim community ... no halal meat, no Muslim schools, nothing like that. But at the end of the day, the investors saw my side of the argument. "With the money we make out of this, we can go on to build ten meat abbatoirs and ten Muslim schools" one of them remarked. These people were really smart. One of them was a Harvard graduate, and I think one of the others had even worked for Goldman Sachs. We need more of these people in Islamic finance.
Q. But of course since then, the internet stocks have collapsed and you've lost all of your money ...
A. No, the investors lost all of their money ...
Q. ... but my point is that you won't be building any abbatoirs or Muslim schools with the profits because there weren't any. All that happened is that $5million was wasted ...
A. Not entirely ... I became famous, like you said.
Q. So what has your fame done for the Ummah, Dr. Iwanto?
A. Well, people are starting to take notice of Islamic finance of course. Recently, the FT interviewed me and also the Wall Street Journal. When people in the West see that Muslims can make above average returns on capital, on a risk-adjusted basis of course, they'll start to realise what a great religion Islam is.
Q. What message would you give to aspiring Islamic financiers?
A. Work hard, read your finance books, learn what the great economists said, learn how markets work, why some countries fail, why others succeed. The knowledge is out there. The World Bank and the IMF have some very useful papers on the net for those who are interested. And don't forget to read the Qur'an too ... it can be quite helpful if you get the English translation.
Q. And what about the critics of Islamic finance?
A. Well, I won't mention their names, but everyone knows who they are. Typically, these people will tell you that modernists like myself have been brainwashed with western economics. Now there are of course some bad points in western economics, like for example the over-reliance on interest, but we recognise this and act accordingly. For example, in our equity fund, we are very tough on interest. Whereas many Shariah compliant equity funds require that interest income is less than 30% of revenue, we insist on no more than 25%. So don't let anyone tell you we're soft on this kind of thing.
Q. Where do you think Islamic finance is going post September 11?
A. That's a good question, and I'll answer it in a round about way if you don't mind. So many Muslims fall victim to the knee-jerk response of condemning America for its past, but don't want to condemn what happened in New York and Washington. Do Muslims really expect to be listened to if they adopt such awful double standards? No other people on earth would have done what those Muslim fanatics did in New York and Washington. Did the Vietnamese ever carpet bomb 2,000,000 Americans to death? Did the Japs ever nuke an American city? Did Iraq help to kill 700,000 American kids? Did Chile ever destabilise a democratically elected American government? Did Nicaragua ever finance Americans to go around blowing up other Americans? The list of what other countries didn't do to America is endless. Why oh why do the Muslims have to be different?
Q. I don't see how that answers the question ...
A. OK, how about this ... The key is to make profits first, struggle for Islam later. People don't want to hear all that guff about injustice, or about American foreign policy, they don't want to debate the right and wrong of things. And anyway, when you have repayments to make on your home financing, you don't have time to go around promoting Islam. We have to buckle down, focus more on worldly things, become profit maximising agents, embrace self-interest. Just like Jeremy Bentham said all those hundreds of years ago.
Thank you Dr. Iwanto
Dr. Abdul Iwanto Bewestern can be found at many Islamic banking conferences.