BNM: Up­hold le­gal cer­tainty for ef­fec­tive dis­pute res­o­lu­tion

The Borneo Post - - FRONT PAGE -

KUALALUMPUR: Malaysia must up­hold le­gal cer­tainty for ef­fec­tive dis­pute res­o­lu­tion to re­main as a lead­ing Is­lamic fi­nan­cial hub, said Deputy Gov­er­nor of Bank Ne­gara Malaysia, Ab­dul Rasheed Ghaf­four.

He said to­day, le­gal cer­tainty was widely said to be cen­tral to the rule of law.

“It is im­por­tant that the law be ac­ces­si­ble, clear and pre­dictable and peo­ple should be as­sured that ques­tions of le­gal right and li­a­bil­ity would be de­ter­mined by rules that met these char­ac­ter­is­tics,” he said at the As­so­ci­a­tion of Is­lamic Bank­ing In­sti­tu­tions Malaysia Law sem­i­nar on‘ Prac­ti­cal As­pects of Dis­pute Res­o­lu­tion in Is­lamic Fi­nance Fa­cil­i­ties’ here yes­ter­day.

The text of his speech was re­leased here yes­ter­day.

Ab­dul Rasheed said in the con­text of Is­lamic fi­nance, the task of up­hold­ing le­gal cer­tainty was even more com­plex for two rea­sons.

“First, shariah prin­ci­ples and re­quire­ments must be in­fused into the law of the land from the re­li­gious sources.

“Se­condly, these pre­scrip­tions, writ­ten many cen­turies ago, must be ap­plied to the con­text of mod­ern fi­nance. For brevity, I will re­fer to these two as­pects of le­gal cer­tainty as shariah cer­tainty,” he said.

He said to­day, Malaysia is in­ter­na­tion­ally recog­nised for its com­pre­hen­sive le­gal and reg­u­la­tory frame­work for Is­lamic fi­nance with many emerg­ing Is­lamic fi­nance mar­kets see­ing Malaysia as a model to em­u­late in this re­spect.

“Look­ing back, I be­lieve that the cer­tainty pro­vided by our le­gal and reg­u­la­tory frame­work has con­trib­uted sig­nif­i­cantly to the de­vel­op­ment of a sound and pro­gres­sive Is­lamic fi­nan­cial sys­tem in Malaysia,” he said.

Ab­dul Rasheed said global Is­lamic fi­nan­cial as­sets stood at US$ 1.9 tril­lion ( US$ 1 = RM4.18) in 2016 and were es­ti­mated to reach US$ 3.2 tril­lion by 2020 with Mus­lims now mak­ing up 24 per cent of the world’s pop­u­la­tion.

“This is a very large and rapidly ex­pand­ing mar­ket and the po­ten­tial is enor­mous. The Is­lamic fi­nan­cial in­sti­tu­tions and le­gal pro­fes­sion­als in Malaysia stand to gain from this, only if they po­si­tion them­selves well enough to serve this boom,” he said.

He said shariah cer­tainty en­tailed two unique chal­lenges whereby shariah pre­scrip­tions must both be in­fused into law, as well as ap­plied to con­tem­po­rary set­tings.

“These chal­lenges are aug­mented by the fast- chang­ing times which busi­ness is con­stantly evolv­ing, and fi­nance is like­wise far from static.

“The ex­pec­ta­tion now for our le­gal sys­tem is to ap­ply the prin­ci­ples of shariah to novel prod­ucts and ap­proaches in a timely man­ner, while re­main­ing clear, suf­fi­ciently flex­i­ble to in­no­va­tion and yet faith­ful to the tenets of the re­li­gious sources,” he said.

Ab­dul Rasheed said this was a tall or­der and the ju­ris­dic­tion which suc­ceeded in do­ing this most re­li­ably would stand in good po­si­tion to ride the wave of the Is­lamic fi­nance boom.

The cer­tainty around the shariah rules ap­pli­ca­ble to a par­tic­u­lar Is­lamic fi­nance fa­cil­ity was cru­cial and equally im­por­tant was cer­tainly on the le­gal en­force­abil­ity of obli­ga­tions in the event that there was non­com­pli­ance to the rel­e­vant sariah re­quire­ments, he said.

“Un­cer­tainty in any of these ar­eas may lead in­vestors to view such fa­cil­i­ties as high risk in­stru­ments, and in ex­treme cases even desta­bilise the Is­lamic fi­nance mar­ket more gen­er­ally,” he said.

He said Malaysia needed to pro­mote con­tin­ued cer­tainty as it moved into the fu­ture and this would re­quire ex­cel­lence at both the in­sti­tu­tional and in­di­vid­ual lev­els.

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