The Islamic financial system continues to grow – at a pace faster than the conventional system. As at end-June 2019, financing outstanding of Islamic banks expanded at 8.6 percent compared to 2.1 percent for the conventional. Meanwhile, new general takaful contributions grew at 16.4 percent compared to 6.2 percent for the insurance premium. However, new family takaful contributions grew at 10 percent, slightly lower to life insurance premium of 15.4 percent. This brings me to the point on impact. Financial institutions, through its intermediary actions, can be an effective agent of change for businesses and economy. In 2018, a number of Islamic financial institutions began adopting a change in their business philosophy. By embracing valuebased intermediation or VBI, more comprehensive financial solutions, beyond just financing, are provided. These may include assistance and advisory as well as capacity building opportunities to businesses in their journey to transition to a more efficient, environmentally friendly and sustainable business as part of financing. To illustrate, Islamic financial institutions will play greater nurturing role in advocating sustainable practices among their client. They will drive programme with other strategic partners who share similar aspirations to provide services beyond financing. Clients will be advised to adopt sustainable practices for example Malaysian Sustainable Palm Oil Certification and necessary funding and technical advises will be provided to the clients accordingly. Traditional credit standards are also being reformed – taking into consideration prospects of a proposed project to create positive impact on wider stakeholders and community.

In adapting to changing economic environment, businesses must have in place adequate risk management and protection. This is key to ensure business sustainability. Takaful operators offer a wide range of commercial protection schemes to help businesses build its risk management. These include protection against risks associated with natural disaster, weatherrelated events, payment default, professional indemnity and damage in crops, among others. For example, trade credit takaful solution to be launched in 2020 complements the wide range of trade finance solutions for importers and exporters that transact on an open account basis. Islamic finance is a natural fit for halalan-toyyiban Let me now move on to the final component – the underlying strength which ties the halal opportunity with Islamic finance – synergy. At the national level, the government supports and recognises the role of Islamic finance as an important tool to develop and grow businesses and SMEs. In the 2019 Budget, the SME Shariah-Compliant Financing Scheme was established to strengthen the development of SMEs. Under the Scheme, the government has committed to subsidise 2 percent of profit rate or borrowing cost for total financing worth RM1.0 billion. A number of other strategies are also being pursued to better position Islamic finance solutions to meet the needs of halal businesses. The industry players have participated in mega events such as Halal Expo 2019, Halfest 2019, and Festival Islam dan Halal Antarabangsa Johor Darul Ta’zim 2/3  BIS central bankers' speeches  2019 to create awareness on its offerings.