On the sideline of the 12th World Islamic Economic Forum (WIEF) held in Jakarta, Indonesia recently; Cambridge IF Analytica (a member of HD-Edbiz Group of Companies) launched its Cambridge Cases series. The case study entitled “Agrobank: Charting a New Path to a Sustainable Growth”, highlighted the importance of connecting the financial sector to the real economy in order to achieve a sustainable financial system. The case was developed in collaboration with Agrobank, a pioneer Islamic bank in agricultural financing in Malaysia. The case study also highlighted Agrobank as an example of cooperation between banking and finance and the real economy all in Shari’a- compliant way.
The case study was launched by Tan Sri Ali Hamsa, Chief Secretary to the Government of Malaysia; and witnessed by President and Chief Executive Officer of Agorbank, Dato’ Wan Fadzmi Wan Othman, together with Dr Sofiza Azmi, Chief Executive Officer of Cambridge IF Analytica. The case was used as part of the curriculum during the Cambridge Islamic Finance Leadership Programme held at Clare College, University of Cambridge from August 20 – 25, 2016.
More than 80 guests witnessed the launching ceremony which was held during the WIEF satellite forum on the topic “Decentralising Growth, Empowering Future Business Forum: From Public Policy Perspective. The Forum was organised by the Razak School of Government. Commenting on the case study, Tan Sri Dr Ali said that Agrobank demonstrates how an organisation needs to restrategise and redefines its role in an ever-changing economic landscape. “We find that many companies that build scale and transform for the benefit of their customers and shareholders are more successful,” said Tan Sri Ali. “We hope that more organisations will benefit from this case study which is a fine example of business empowerment. Companies that initiate change will have far better opportunity to manage the change that is inevitable,” he further added.
Dato Wan Mohd Fadzmi Wan Othman stressed that since food is synonymous with agriculture sector and halal factor is essential to the Muslim community, the conversion to a full-fledged Islamic bank enabled Agrobank to provide Islamic banking products and funding to complete the cycle of halal food production.
CASE SUMMARY
On 1st July 2015, Agrobank officially become a full-fledged Islamic bank and thus embarked upon strengthening its footprint within the country’s vibrant financial services industry. Established in 1969 and corporatised in 2008, Agrobank has been central to the development of the agriculture sector and agriculture-related business while supporting the government’s vision to establish Malaysia as a global hub in Islamic finance and the halal industry. Since food is synonymous with agriculture sector and halal factor is essential to the Muslim community, the conversion to a full-fledged Islamic bank enabled Agrobank to provide Islamic banking products and funding to complete the cycle of halal food production.
With 46 years of experience in the agricultural banking industry and excellent track record, the Agrobank is an example of cooperation between banking and finance and the real economy – all in a Shari’a-compliant way. The case study highlights the importance of connecting the financial sector to the real economy in achieving a sustainable financial system. It also analyses Agrobank’s developmental role in:
- Promoting agriculture as an engine of economic growth.
- Promoting Islamic finance as a viable and competitive component of the financial system.
- Enabling funds to be channelled into the production of halal food found throughout the value chain within the halal economy
- Scaling up financial inclusion through Islamic microfinance
