Political, Economic Stability To Keep Malaysia Ahead In Islamic Finance

KUALA LUMPUR-Malaysia is well-positioned to stay ahead of the Gulf countries in Islamic finance due to its political stability and a diversified economy, according to an expert on comparative economic history.

A joint director of research at the International Centre for Education In Islamic Finance, Professor Dr Murat Cizakca, said Malaysia could rely on sectors such as industrial and agriculture, while the Gulf countries mainly on oil which at some point may run out or needed to be substituted.

"Malaysia is a more diversified economy and that is much more healthy in the long run. That is what Dubai is trying to do as it goes into tourism now," he told reporters after giving a talk on "The Maqasid al-Shariat, Rule of Law, Democracy and Capitalism" here Monday.

Asked if Malaysia could stay ahead of the Gulf countries in Islamic finance, he said the country would proceed faster and further because of democracy.

But Cizakca said Malaysia could also tighten up its democracy and stressed the importance of maintaining racial harmony in order to boost the economy.

"Democracy contributes to institutional evolution, which not only reduces transaction costs but also improves legality and economic growth.

"A one percent increase in the effectiveness of law (legality) or institutions enhances the gross national product growth rate by as much as 4.75 percent," he said.