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Tuesday, 21 October 2008

Malaysia wants global Islamic bank standards

KUALA LUMPUR, Oct 21 (Reuters) - Malaysia wants Islamic financial authorities to push for common global standards, saying that differences are very small and that the process of integration needs to be accelerated for the market to grow.

Malaysia has the largest sukuk market in the world, but a lack of standardised documentation and practices has been repeatedly highlighted by the Islamic finance industry as one of the key constraints on the rapidly growing sector.

"There is no basic difference in what is Islamic and what is not. We agree on 95 percent of the products. We differ on only 5 percent of the products," Malaysia's Second Finance Minister Nor Mohamed Yakcop said on Tuesday.
Islamic law is open to interpretation, which leads to differences in banking practices depending on the financial institution's advisors. Moves towards standardisation have been mooted but a plethora of bodies claiming to enforce standards has emerged.

"That (integration) process needs to be accelerated and we have this opportunity to promote Islamic banking," Nor Mohamed told a financial conference in Kuala Lumpur, without specifying who should drive or oversee the establishment of global standards.

Assets invested according to Islamic guidelines have been growing at roughly 20 percent a year worldwide, reaching $900 billion in 2007, and are set to grow to $2 trillion by 2010, accountants Ernst & Young estimated.
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