Zeti Akhtar Aziz: The development of Islamic finance
Welcoming remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the
Royal Award for Islamic Finance gala dinner, Kuala Lumpur, 25 October 2010.
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It is my very great honour to welcome this distinguished audience to this special gala dinner
organised by Bank Negara Malaysia and the Securities Commission to commemorate the
presentation of the inaugural Royal Award for Islamic Finance. This gala dinner is also held
in conjunction with the Global Islamic Finance Forum 2010 that is taking place this week, and
which commenced this morning.
Tonight, in commemorating this prestigious Royal Award for Islamic Finance, we are blessed
and honoured to have Kebawah Duli Yang Maha Mulia Tuanku Haji Abdul Halim Mu'adzam
Shah who will graciously confer the winner with the award. Bank Negara Malaysia and the
Securities Commission are proud to jointly sponsor this award under the auspices of the
Malaysia International Islamic Financial Centre initiative (MIFC). Allow me to take this
opportunity, as Chairman of the MIFC Executive Council, to record our utmost gratitude to
the Rulers' Council of Malaysia for bestowing the Royal title to the award, giving it the highest
distinction and recognition.
Earlier this year, Malaysia launched a global search for the winner of this auspicious award
which seeks to honour the exceptional individual who has made the most outstanding
contribution to Islamic finance. Indeed, we have seen numerous individuals who have made
significant efforts and contribution to make Islamic finance what it is today. In creating such
an award which will be given once every two years, it is our fervent hope that the conferment
of this award will be inspirational to such involvement and contribution to Islamic finance.
Malaysia's experience in Islamic finance officially began with the establishment of the
Pilgrimage Fund or the Tabung Haji in 1969 as an Islamic savings institution. Then, the first
Islamic bank was set up in 1983 and in the following year, the first Takaful operator was
established. Today, we have a comprehensive Islamic financial system that operates in
parallel with the conventional financial system. Following liberalisation initiatives in this
decade, there has been an increased foreign presence in our Islamic financial system. In
particular, there has been greater foreign participation in Malaysia's Islamic financial
markets. The diversity of market players has contributed to increased competitiveness of the
Malaysian Islamic financial services industry. To ensure the sustainability of our Islamic
financial system, it is also supported by a robust regulatory and supervisory regime, legal
and Shariah framework, and payment and settlement systems.
In this decade, greater focus was particularly given to the institutional arrangements to
develop the sukuk market. The sukuk market now accounts for more than fifty percent of our
bond market. The market has drawn the participation from a wide range of international
corporations and multilateral agencies in raising funds and investing in the sukuk issuances
out of Malaysia. More recently, there has also been continuous innovation and an increasing
number of issuances in foreign currency. As Malaysia offers international participation in our
Islamic financial system, we offer to be an international gateway, particularly in strengthening
the link between the two important dynamic growth regions of Asia and the Middle East.
Malaysia will also continue to collaborate with other regulatory authorities to ensure financial
stability in the Islamic financial system. This will be through our active involvement in the
Islamic Financial Services Board (IFSB), the Islamic Financial Stability Forum (IFSF), the
initiatives by the Islamic Development Bank (IDB), and finally in the newly formed
International Islamic Liquidity Management Corporation (IILM).
In the area of capacity building, Malaysia has also given priority to two areas: one is in
human capital development and the second, in catalysing mutual recognition of Shariah
interpretations. The International Centre of Education in Islamic finance (INCEIF) was
established in 2006 for advanced education for practitioners in Islamic finance, and in 2008,
the International Shariah Research Academy (ISRA) was established to conduct applied
Shariah research on the contemporary Islamic finance issues and to provide a platform for
active international engagement among Shariah scholars.
Moving forward, Malaysia will continue its efforts in strengthening our international linkages
in the global Islamic financial system through collaborative partnerships and cooperation with
the objective of contributing towards greater international financial and economic integration.
Let me conclude. On behalf of the MIFC Executive Committee, I would like to express my
appreciation to the members of the panel of jury for the Royal Award for Islamic Finance
which is led by Yang Amat Berbahagia Tun Musa Hitam, former Deputy Prime Minister of
Malaysia and also to the members of the taskforce that was chaired by Tan Sri Zarinah
Anwar, Chairman of the Securities Commission, who oversaw the establishment of this
prestigious award. It is my sincere hope that this Royal Award will be an inspiration to the
global development of Islamic finance.