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Saturday, 17 October 2009

Investors Urged To Use Malaysia As Base For Islamic Finance

Manama (Bahrain), Oct 16 (Bernama) -- In line with efforts to promote Malaysia as an Islamic financial centre, investors are being encouraged to use the country as a gateway for investment and base for financial activities.

"Let's jointly promote Islamic finance in the international market and the mutual acceptance of each others' financial products while marketing them together," the Raja Muda of Perak, Raja Dr Nazrin Shah ibni Sultan Azlan Shah, urged in an interview here.

He pointed out that Malaysia is generally a business friendly place and there are lots of attractive policies in place for foreign investors, wanting to invest in the country.

Raja Dr Nazrin Shah, who is also the financial ambassador of the Malaysia International Islamic Financial Centre (MIFC), led a roadshow delegation comprising regulators and industry players to Qatar and Bahrain from Oct 10-15.

Tracing the development of Islamic finance in Malaysia, he said in 1983, the first Islamic bank was established in the country and in the 90s, banks were invited to open windows within their system to start trading in Islamic products.

He said the MIFC intiative was established in 2006 to establish Malaysia as the centre for Islamic finance and to integrate the country within the Islamic financial community.

"We (Malaysia) now have an Islamic capital market and are the largest producer of Sukuk (Islamic bonds).

"I think 60 percent of Sukuk originates from Malaysia. We have Islamic insurance, re-insurance and asset management, developed over the last few years," he explained.

According to Raja Dr Nazrin Shah, the underlying principle of Islamic finance is basically to prohibit accessive risk taking and speculative activities while it is also sound finance.

He said non-Muslims are also beginning to use Islamic products, especially in Malaysia.

"I think we have progressed much and Malaysia is the centre for Islamic finance," he said, when asked how far had Malaysia come as an international Islamic financial base.

He also said there was a need for greater collaboration and dialogue to promote Islamic finance in international markets.

"These are the basic pillars that have to be considered on a continuous basis in order to promote Islamic finance, he added.

"In 1997, Malaysia went through a financial crisis and that was a wake up for us. Since 1997, we have strengthened our financial system while putting in place stronger regulatory and supervisory considerations, for greater corporate governance and best practices.

"Because of these reforms, it has put us in good stead in withstanding the present economic crisis," he said.

He said Malaysia like many other countries had been affected by the economic crisis.

"Basically,there has been a contraction in demand for our exports.But the financial system remains strong as our banks are very well capitalised," he highlighted.

Raja Dr Nazrin Shah said Malaysia is a very open economy and its growth has been export driven.

In the present situation, he said, demand in the developed economies and Europe is low and it might take some time for them recover from the crisis.

He stated that countries like Malaysia, which traditionally depend on exports, now have to look to alternative markets as in South East Asia and boost domestic demand.

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