Strengthening the robustness of the corporate governance framework and practices has become even more important in today's environment of greater uncertainty and heightened risks. Indeed, it is timely that efforts are focused to strengthen the corporate governance in Islamic financial institutions given the wider range of contracts entered into by the Islamic financial institutions and their customers that inherent in Islamic finance. In particular, the efforts should include the formation of an appropriate governance structure of the institution and the requirement for full disclosure. My remarks today will focus on five key areas important for securing an enhanced governance framework for the Islamic financial institutions that takes into account the role and responsibilities of the shareholders. My presentation will also touch on the experience and approach that Malaysia has adopted to secure a robust governance framework for the Islamic financial institutions. Firstly, the task is to ensure the design and implementation of the corporate governance strategy should not impose a regulatory burden to the business objectives and the growth potential. In designing and implementing corporate governance standards and core principles for Islamic financial institutions, the challenge is to formulate a framework that does not only take into account the unique characteristics peculiar to Islamic financial business, but that fosters innovation and competition thereby support the growth potential of the industry. Essentially, the design and strategies needs to secure the twin objectives of achieving continuous business performance and robust corporate accountability.

This is attributable to various policies and practices adopted in the region following the lessons learned from the Asian financial crisis in 1997–98. On the local front, Malaysia has been largely successful in dealing with the challenges brought about by the global crisis. The economy has recovered beginning from the fourth quarter of 2009. Prompt government responses and initiatives, as well as the existence of strong macroeconomic fundamentals and a sound financial system are the principal factors. In the first quarter of 2010, most Asian economies registered robust growth, with Malaysia  BIS Review 76/2010  1  recording a 10.1% real GDP growth. Another recent measure of Malaysia’s resilience is its rating in the IMD World Competitiveness Yearbook 2010. Malaysia’s global competitiveness ranking improved significantly from 18th place in 2009 to 10th place in 2010, out of 58 economies. Malaysia has successfully issued a $ billion sovereign Sukuk (Islamic bonds) last Friday with large international demand even during a period of volatile financial markets. This further attests to Malaysia’s success as well as international acceptance of Malaysia’s standing as a major international Islamic financial centre. Although Malaysia fared relatively well during this crisis, we should not be complacent. We should leverage on the lessons learnt from this and the late 1990s crises to improve our resilience to any future shocks. There is at present obvious optimism among financial institutions following the improved economic outlook and market sentiment.