Islamic Microfinance

The Number of Islamic Microfinance Institutions in Malaysia Should Be Increased.

Table of Content

Page

1.0 Abstract 2

2. Introduction 3

3. Argument 1 : Offer Syariah Compliant Finance 5

4. Argument 2: Increase the Performance of Islamic Banking and Finance 7
5. C. Argument: Risky and Costly to Implement Islamic Microfinance 9
6. Argument 3: Provide Financial Assistant for Low and Middle Income Groups. 11
7.0 Conclusion 13

Reference 14

1. Abstract

Recent years, Islamic microfinance has become more popular among Malaysian. It has been offered by Islamic Financial Institutions and also Non-governmental organizations. However, the number of Islamic microfinance institutions in Malaysia still in a small number. Due to the demand of Malaysian for Islamic microfinance that cannot be fulfilled recently, the number of Islamic microfinance should be increased. The purpose of this academic research was to identify and discuss the reason for needs of increasing number of Islamic microfinance institution in Malaysia. Somehow, some institutions refuse the establishment of Islamic microfinance institutions. This and other results of the research will be discussed.

2. Introduction

As a developing country, most of the businesses in Malaysia are small and medium enterprises. Based on the data by Census of Establishments and Enterprises 2005 issued by the Malaysian Department of Statistics, there are over 430000 micro enterprises in Malaysia. From the increasing number of SMEs, the number of banking and finance institution also keeps increasing to cater the needs of Malaysian. This is why government put a serious effort in improving the performance of SMEs by introducing microfinance a long time ago. As at June 2009, there are around RM2 billion financing outstanding for microfinance. Microfinance offer micro saving, micro credit, micro leasing and many more with a