Other investment opportunities include in Shariah-compliant real estate investment trusts (REIT), in unit trusts and in the Islamic exchange traded fund (ETF). The capital market intermediaries in Malaysia, that is, the investment banks and Islamic fund management companies have had a key role in supporting the development of this industry. Both retail and wholesale products are being offered in ringgit and non-ringgit currencies. There is also no restriction in investing 100 per cent of the funds abroad. The foreign exchange administration rules now allow for the free mobility of inward and outward movement of funds. Pillar 3: international Islamic banking The Islamic financial system has also been extensively liberalised to allow for the entry of foreign Islamic financial institutions that offer both domestic and international banking business. In addition, the foreign equity ceiling in Islamic financial institutions has been raised to a maximum of 49 percent as part of the effort to promote strategic alliances. The Islamic banking business in foreign currencies can be conducted by the international  2  BIS Review 97/2008  currency business units (ICBUs) that may be set up within existing financial institutions and the international Islamic banks. Such international Islamic banks may be established as either a branch or a subsidiary. Currently, about 16 percent of total assets in the Malaysian banking system is Shariah compliant. Pillar 4: international takaful business The fourth pillar is takaful and retakaful business.

It will also enhance public confidence in the efficiency and performance of the financial system to contribute to the overall development of the economy. This approach is also a move towards a differentiated regulatory and supervisory approach whereby companies that demonstrate strong corporate governance standards and risk management practices will be accorded 'lighter regulatory touch', which implies that they will be given greater regulatory flexibility. This underscores the importance of capacity building by the financial institutions in research and development and re-engineering of business processes in search of operational excellence and enhanced customer service delivery. A strong culture of excellence is therefore vital: one that is embedded in all levels of the organisation; one that fosters and rewards innovation and service quality. A customer-centric focus is, and will continue to be, the winning formula for a successful financial services provider. In particular, insurers must ensure suitability of products sold or advice given; play an active role in enhancing financial capability of consumers; and ensure policyholders are treated fairly. This regulatory approach will basically benefit those companies that are efficiently-run and wellcapitalised. In this regard, Axa Affin will benefit from this new regulatory approach if it puts in place a risk management system that could be used to capitalize incentives accorded by the new framework. The synergies derived from the strengths of the bank and the experience of foreign insurance partner should be harnessed to benefit from this new environment, particularly in the bancasurance line of business.