Groups to assess the performance of Islamic financial system

Points of Essence:

• A Task Force has been set up in Kuala Lumpur to study the performance of the global Islamic financial system. The initiative moved by the Islamic Development Bank and driven by the Central Bank of Malaysia, the task force will deliver a report by September for proposals to enhance the resilience of the Islamic financial system. The Star has the report.

KUALA LUMPUR: The Task Force for Islamic Finance & Global Financial Stability has set up three working groups to assess the performance of the Islamic financial system amid the current financial crisis.

Dr. Zeti: Sustaining Malaysia as a Platform for International Islamic Finance

Points of Essence:

• The Islamic banking in Malaysia continued to record growth with assets size stood at RM234.9 billion, a jump of 23 % from the previous year. The industry accounted for 16.7% of total assets in the industry.  With a total deposit of RM180.4 billion (27.7%  increase from last year) and a hike of 24.5%  in total financing to RM143.4 billion together with 93 new full-fledged Islamic banking branches opened this year, Malaysia is expected to maintain its lead in Islamic finance.
• On the capital market side, the Malaysian sukuk market had a comfortable average annual growth of 22 % since 2001. Building up its niche in structuring innovative Islamic financial instruments, a slump in the sukuk issuance had no effects on Malaysia as the demands for more innovative products like Sukuk Musharakah had increased to 84% surpassing 58% mark of the total sukuk issuance in 2007. More new products have been churned out including residential mortgage backed securities, Commodity Murabahah deposit products, commodity based financing, credit card based on ujrah, as well as, structured products based on Musharakah, Mudarabah and Ijarah.
• A conducive environment for innovative advancement that is supported by a regulatory framework will always be the hallmark of lslamic finance in Malaysia. as that ensures not only the stability of the system but also promotes the active and vibrant functioning of the system. The liberalization of the Islamic finance industry with the setting up of foreign Islamic subsidiaries in its Islamic financial system will enhance the outreach of Islamic finance and strengthen Malaysia’s international linkages. With all the framework put in the right places, Malaysia is set to sustain its status as an Islamic finance leader. Read the full speech by the Malaysian central bank’s governor when opening HSBC Amanah Malaysia in Kuala Lumpur recently.

Governor’s Address at the Launching of HSBC Amanah Malaysia Berhad: “Sustaining Malaysia as a Platform for International Islamic Finance”

Speaker : Governor Tan Sri Dato’ Sri Dr. Zeti Akhtar Aziz Venue : Kuala Lumpur, Malaysia Date : 25 November 2008 Language : English

It is my pleasure to be here today at this official launch of “HSBC Amanah Malaysia Berhad” (HSBC Amanah). This launch is significant in a number of respects. It reflects the continued expansion of Islamic finance in Malaysia , taking place at a time of great uncertainty in the global financial system. The launch of HSBC Amanah, as an Islamic subsidiary of an international financial group, is also significant as it will contribute towards enhancing further the international dimension of Islamic finance in Malaysia , thus strengthening our international financial and economic linkages with other parts of the world.

Malaysia central bank to rule on sharia standardisation

Points of Essence:

• Malaysia’s Central Bank will issue guidelines on standardized application of Islamic finance contracts. Planned to be launched in the first quarter of 2009, the guidelines will set the features of murabaha, istisna, mudharabah, musharaka and ijarah as a benchmark in designing new Islamic financial products or enhancing the existing products.

KUALA LUMPUR, Nov 11 (Reuters) – Malaysia’s central bank will issue guidelines to encourage a more standardised application of Islamic finance contracts, its head said on Tuesday, aiming to tackle one of the chief challenges plaguing the industry.