Malaysia has one of the most active primary sukuk market with an average annual growth of 17% during the period 2001-2006. It also has one of the most active secondary market with the turnover of the sukuk trading registered more than USD40 billion annually. International issuers with good rating will benefit from the simplified issuance procedures. This is in addition to the ability to issue multi-currency sukuk and the flexibility to swap RM funding into other currencies to enable foreign issuers to capitalize on the price premium of issuing RM denominated sukuks. A further area of collaboration is outsourcing, in-sourcing or white labelling. These mechanisms will not only serve as a means to drive down cost of doing business, achieving economies of scale and the avoidance of duplication of resources, but also gives optimum focus by players to develop the newly ventured Islamic finance business. Malaysia's experience in Islamic financial operations and product design can be leveraged upon to systematically structure a complete solution to be offered to other players. Going forward, Islamic finance as a new industry requires more initiatives to expand the horizon of business parameters and innovative products offerings. There is a need to conduct further in-depth research on Shariah issues relating to risk mitigation, liquidity management and hedging. The combined market knowledge and insights from education and training institutions such as INCEIF, the International Centre for Education in Islamic Finance in Malaysia can make meaningful contributions to the global Islamic finance industry that addressed both market needs and Shariah compliance.

This has led to its proliferation through multiple layers of leveraging and disproportionate distribution, in turn, which could result in higher systemic risks, thus, increasing the potential for instability in the financial system. In addition, transparency represents a basic tenet underlying all Islamic financial transactions. There is an inherent obligation on Islamic financial services providers to meet the appropriate standards of transparency. It is from the profit-sharing feature of Islamic financial transactions that imposes a high level of disclosure in the financial contract. The accountabilities of the respective parties involved in the transaction are clearly defined in the contract. This transparency also provides a strong incentive for Islamic financial institutions to appropriately manage risks. This disclosure allows the market to assign the appropriate risk premiums to the respective companies and thus the potential for the enhanced role of market discipline to take effect. These inherent features as required by the Shariah injunctions provides inbuilt checks and balances which serves to ensure financial stability in the Islamic financial system. These features are also reinforced by the development of a comprehensive regulatory and supervisory regime which has been strengthened considerably with the establishment of the Islamic Financial Services Board in 2002. It's establishment has also contributed to the harmonisation in the development of Islamic finance across different jurisdictions. Finally, education institutions have been established to develop the supply of professional talent and expertise in Islamic finance to support the growth and development of Islamic finance going forward.