KUALA LUMPUR — Malaysian Prime Minister Abdullah Badawi has revealed his nation's ambition to become a centre of Islamic finance, facilitating investments and trade ties between East Asia and the Middle East.
"We have taken strategic measures to tap the Islamic finance potential by setting up a committee to create an effective delivery system," he said while inaugurating the Islamic Financial Services Board annual meeting and Global Islamic Finance Forum yesterday.
He said Islamic banking, takaful, re-takaful and Islamic capital markets have been liberalised to allow the entry and licensing of new domestic and international players for carrying out business in international currencies, while fund managers may also enjoy tax benefits.
Malaysian Prime Minister Abdullah Badawi said Islamic finance provides a viable means of mobilising capital for investment and financing in conformity with Shariah requirement and its universality has attracted non-Muslims also to boost the size of Islamic transcations to record high figures. He said that the sukuk market has already surpassed the $50 billion mark.
The prime minister said: "There is huge scope for it, as infrastructure projects in the middle east and Asia alone are expected to exceed $500 billion, which can be raised by sukuks."
"Malaysia is commited to supporting the development of a comprehensive Islamic financial services indsutry... olur assets have raisen to $38 billion, 12 per cent of total assets in the domestic banking," he said. Dr Zeti Akhtar Aziz, Governor Bank Negara Malaysia in her opening speech at the Global Islamic Finance Forum 2007 said that the Islamic financial system, comprising the financial institutions, the markets and the finacial infrastructure, has demonstrated its viability and robustness as a form of financial intermediation.
"Its growing role in mobilising and channeling the funds to productive investment activities across borders bring two significant benefits to the global economy as it enhances the potential for higher global growth as well as rebalancing it," said Dr Zeti. She said that the strengthened international financial linkages allows for greater potential for the diversifaction of risks. "The increase in the Islamic financial products, growing number of asset classes being offered, the increased cross ownership of assets all have expanded the possibilities for diversification of risks and the potential for return," added the Bank Negara Malaysia governor