Malaysia Strives To Be An International Islamic Financial Hub

Bernama -- Malaysia is now entering a new phase in the development of the Islamic financial system with initiatives to position the country as an International Islamic financial hub.

Bank Negara Malaysia (BNM)governor Tan Sri Dr Zeti Akhtar Aziz said the initiatives were aimed at strengthening international economic and financial connections, thus promoting greater regional and international trade as well as investment activities.

"Due to wide ranging liberalisation measures, we have seen the entry of new foreign Islamic financial groups into our financial system and increased foreign interest in domestic Islamic financial institutions," she added in her opening remarks at a course on "The Fundamentals of Islamic Finance", here Monday.

The one-day course was jointly-organised by BNM and the Islamic Development Bank with 14 countries participating.

It was aimed at providing a platform to foster greater understanding of Islamic finance and its increasing role in the international financial system amongst countries whose governments and financial regulators are keen to develop an Islamic financial system.

"Islamic finance is now viewed as a competitive form of financial inter-mediation and has drawn significant participation from non-Muslims. Today, the total assets of the Islamic financial system has surpassed one trillion US dollars, about five times more than five years ago," Zeti said.

"Islamic finance contributes to greater financial stability because its very fundamental requirement is that transactions must be accompanied by genuine trade and productive activities.

"In addition, the inherent obligation on Islamic financial contracts to clearly define the risks and profit sharing elements ensures a high standard of transparency," she added.

She also highlighted that the regulatory and legal framework for Islamic finance has undergone significant evolution.

"This ensures that its growth and development is accompanied by the corresponding development of the supporting legal, regulatory and supervisory framework to ensure soundness and stability," she said.