While acknowledging the necessity of having different rules in certain areas to reflect the underlying fundamental differences between the two systems, a key consideration of the Bank is to maintain a level playing field. Given the functioning of Islamic finance in parallel with the conventional financial system, neutrality in treatment between takaful and conventional insurance products is considered important to ensure the sustainability of both systems in the economy. The dual system would also serve to provide a comprehensive array of financial products and services as well as intermediaries for the overall benefit of consumers. BIS Review 123/2007  3  Allow me to also share with you Malaysia's latest initiatives to strengthen its position as an international Islamic financial centre. In line with our efforts to enhance our inter-linkages with the global Islamic financial markets, the Malaysian Government has launched the Malaysia International Islamic Financial Centre or MIFC as part of the initiatives to position Malaysia to become a leading international Islamic financial centre. It is our objective to build greater intermediation linkages between East Asia, South Asia and the Middle East which will, in turn, further expand inter-regional trade and cross border investment flows. As part of these initiatives, foreign financial institutions are allowed to establish International Islamic Banks, International Takaful Operators, as well as International Currency Business Units to undertake international currency business in Islamic finance with non-residents in Malaysia or abroad through a locally incorporated entity or a branch.

With a gathering of more than 300 industry leaders from 25 countries, I am confident that the deliberations will generate new solutions/strategies in an industry that is undergoing rapid transformation, underpinned by globalization, broad-based financial deregulation and increasing opportunities as well as uncertainties amidst an environment of heightened volatility. Rapid developments in technology and financial liberalization have played a catalytic role in transforming the financial services industry worldwide. Consequently, traditional business boundaries have become increasingly blurred, as demand for financial products and services become more diverse and sophisticated, transcending the traditional offering of stand-alone banking, insurance or investment products. As changes in the global financial industry continue to occur and indeed accelerate, insurance companies in the region will face mounting pressures to adapt effectively into the evolving environment by embracing innovation and becoming strategically more focused. A key ingredient in supporting such transformation is to nurture strategic leaders who have the foresight to anticipate, influence and reshape the strategies in tune with these developments. Charting the journey forward, insurance leaders need to consider the following salient trends: •  Firstly, the global trend seen in several industries, including insurance, to reduce costs and increase efficiency and productivity in an increasingly competitive environment. The traditional paradigm of pricing goods and services purely on costplus basis should therefore be re-evaluated. Indeed the focus needs to be shifted towards providing products and services that provide superior value proposition to consumers, made possible through re-engineering of business processes and operating models that promote greater productivity and competitiveness.