SHAFAQNA -Â Cambodia, a country whose official religion is Buddhism, but which has a sizeable Muslim minority, is considering the possibility of having interest free finance in its country-wide microfinance initiatives as an alternative to conventional loans according to a report in the Gulf times.
The idea was discussed at a roundtable session organised by the World Islamic Economic Forum (WIEF) Foundation held in Phnom Penh earlier this August, an event that actsÂ as a precursor to the 11th World Islamic Economic Forum to be held in Malaysia in November.
A group ofÂ panellists Â have siadÂ that interest freeÂ microfinance can be seen as a â€œhybrid solutionâ€ that combines social and ethical principles of interest freeÂ finance with microfinanceâ€™s efficiency in reaching out to the poor. At the same time, it isÂ Â aimed at the welfare of the participants rather than just at accumulation of wealth for those who provide the financing.
The interest-free microfinance covers financing mainly through endowment funds to which people contribute out of charity.
â€œTherefore there is no cost of capital,â€ Alhabshi said, â€œand cost of operations can be very low.â€
In addition, interest freeÂ microfinance in Cambodia could help establish and financially strengthen small and medium business ventures of Cham Muslims, which, in turn, could eventually become interesting for intersest freeÂ bankingÂ in Southeast Asia and the Middle East once they have reached a critical size.
For the greater population, interest freeÂ microfinance could be simply seen asÂ â€“ religiously neutral â€“ â€œethical financing solution,â€ a strategy that has been successful in Indonesia and Malaysia, the conference suggested.