View - ResearchGate

Aishath Muneeza, Ismail Wisham, Rusni Hassan,
International Islamic University Malaysia
Emergence of two systems within the same organism would
predictably give rise to certain clashes and a need arises
where these clashes and challenges are addressed if the
effort to bridge the gap is to be effected at a useful level.
These clashes include those based on legislative grounds and
those faced in the process of judicial adjudication in dispute.
It even includes those which are relevant to alternative
means of dispute resolution.
While the Pakistani (and essentially Iranian, Sudanese as
well) model of establishing Islamic banking which saw an
almost overnight implementation, surfacing problems of its
own, Malaysia chose to do it gradually. But, while the
aforementioned model had its drawbacks, there might be
certain lessons Malaysia may learn from it. The national
scale at which it was kicked off, the several legislation which
were drafted, the extensive administration and management,
at least at the initial stages, the subsequent weathering of
the whole device, the desperate attempt to revitalize by the
Pakistani Supreme Court, the subsequent National Bank’s
directive are all lessons from which examples may be drawn.
It is interesting to note how Pakistan managed to take a step
back and re-evaluate their measures and stands on Islamic
banking and how they saw that complete transformation of
the financial system, bringing about several practical
problems, and that the parallel approach was seen the best
interest of the country.
Malaysian Islamic finance establishment can very well be
said to have started in 1963 with the establishment of the
Tabung Haji, under the guidance of National Fatawah
Committee of Malaysia. The long-term objective of the
Central Bank of Malaysia, when it setup the Bank Islam
Malaysia Berhad (BIMB) was to create an Islamic banking
system operating parallel to the conventional banking
system. The application of Islamic finance received a
tremendous boost in Malaysia with the passing of the Islamic
Banking Act 1983 (Act 276) followed by the establishment of
the first commercial bank, licensed under the Islamic
Banking Act, to operate on Islamic principles in Malaysia,
namely Bank Islam Malaysia Bhd. This is generally seen as
the formal entry of Islamic law into the mainstream of the
laws and legal system in this country. The desire to establish
a comprehensive Islamic financial system, however, has
189