Malaysia eyes Is­lamic fi­nance frame­work

The Pak Banker - - Company& -

PUTRAJAYA: The deputy gover­nor of Malaysia has said that other coun­tries can learn from the Malaysian sys­tem of op­er­at­ing Is­lamic fi­nance, be­liev­ing the coun­try is de­vel­op­ing "laws of choice" for in­ter­na­tional cen­tres.

Speak­ing at the joint In­ter­na­tional Shari'ah Re­search Academy for Is­lamic Fi­nance and In­sti­tute of Is­lamic Bank­ing and In­surance in London yes­ter­day, Dato' Muham­mad Ibrahim said that the Is­lamic in­dus­try is cur­rently worth over $1tn (€0.77tn) with more than 300 in­sti­tu­tions op­er­at­ing it world­wide.

He be­lieves that with the method of fi­nance, which places a fo­cus on eth­i­cal in­vest­ing and risk-shar­ing, be­com­ing in­creas­ingly global that it is "crit­i­cal" that a le­gal frame­work for Is­lamic fi­nance is in­ter­na­tion­ally fa­cil­i­ta­tive.

Ibrahim pointed to the Cen­tral Bank of Malaysia Act of 2009, which en­acts sep­a­rate laws for bank­ing and Is­lamic in­dus­try and as­signs a judge to pre­side over lit­i­ga­tions to en­sure the sanc­tity of con­tracts, as a struc­ture that is "unique" to the in­dus­try. "This ap­proach has proven to be suc­cess­ful and crit­i­cal in in­still­ing pub­lic con­fi­dence in the Shariah in­tegrity of the in­dus­try.

"Whilst en­act­ing a sep­a­rate gov­ern­ing law avoids the trap of con­fin­ing the scope and op­er­a­tion of Is­lamic fi­nance within the mould of con­ven­tional fi­nance, this ap­proach has proven in Malaysia to be the most ef­fi­cient way pos­si­ble to reg­u­late Is­lamic fi­nance." He noted that Ire­land and France have re­cently made "sig­nif­i­cant steps" to­wards fa­cil­i­tat­ing Is­lamic fi­nance, while be­liev­ing that Aus­tralia, Jor­dan and Le­banon are all work­ing to­wards re­view­ing their leg­is­la­tions to be ac­com­moda­tive to Is­lamic fi­nance. -PB News

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