muhammad bin ibrahim : malaysia and turkey – the new silk route in islamic finance – strategies for collaboration, cooperation and smart partnership opening remarks by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at a business seminar on islamic finance istanbul : “ malaysia - turkey islamic finance cooperation : new solution – preferred partner ”, istanbul, 29 september 2011. * * * i have the honour today to welcome distinguished guests to the business seminar organised by bank negara malaysia, held in this beautiful and historic city of istanbul. the theme “ malaysia and turkey : the new silk route in islamic finance – strategies for collaboration, cooperation and smart partnership ” was chosen as a reflection of our desire to strengthen economic and business ties for the mutual benefits of both countries. the emergence of the “ silk route ”, a term coined by governor dr zeti in 2006 opens up exciting prospects for countries and businesses. the new “ silk route ” not only carries traditional trade of goods and services of old but also manufactured goods, technological innovation and know - how, portfolio flows, private equity investment and mobility of human capital and knowledge. today, islamic financial products and services are truly “ new ” additions to this trade. let me first express our heartfelt appreciation to his excellency tun dr. mahathir mohamad for accepting our invitation to speak at this event, sharing his thoughts on islamic finance. tun dr. mahathir needs no introduction. among his many achievements was the time he steered the country during the 1997 – 98 asian crisis. his unorthodox policies then have become mainstream now. under his leadership, malaysia experienced modernisation and economic prosperity, a development most profound for my generation. that modernisation included the early development of islamic financial system. from the seeds planted during tun mahathir ’ s time, we are now seeing the maturing of the islamic financial system in malaysia that is innovative, competitive and increasingly internationalised. what was once a novelty has become an alternative means of conducting business. we owe this very much to tun dr. mahathir ’ s foresight and wisdom. not many people today realised that one of the first actions that tun dr. mahathir took when he came to office in 1981 was to set up a national steering committee to implement islamic banking in malaysia. the report of this committee on the viability and strategy of the islamic banking, was the impetus for the creation and robust development of the islamic financial industry in malaysia. the rest they say is history

. global economic challenges and islamic finance the world is transforming and its transformation is way beyond what we had seen before. this is an era of radical change, new rules are being formulated, standards and best practices that were in vogue hardly 5 years are now considered insufficient. it is changing at a scale and speed we had never experienced before, that require us to accelerate our own pace of transformation, to enable us to survive and prosper under this “ new normal ” operating environment. the world is currently faced with wide - ranging challenges that include among others – excessive indebtedness, at household businesses and at sovereigns. many are grappling at finding the solutions to overcome the complex issues facing them today. some of the problems look uncannily similar to what we had faced in the 1990s, but the solutions might be different this time. but whatever that solution might be, we must never discount any probable answers including unorthodox measures. experience during the asian financial crisis had shown that unconventional measures could very well be the future best practices. but then, yesterday ’ s solution may no longer be adequate to address today ’ s challenges. therefore, we must endeavour to search for new alternatives bis central bankers ’ speeches and embark on new ventures that could mitigate the contemporary issues and challenges confronting us. and this is where islamic finance can fit in and play a meaningful role. as an objective, we need to build the foundations for a stronger and more inclusive global economy with sustainable growth and greater shared prosperity by all. this objective is in fact fundamentally in line with the role and relevance of islamic finance. islamic finance emphasises on attainment of socio - economic goals espoused on shariah objectives. it emphasises on a strong linkage to productive economic activity to generate legitimate income. it also emphasises on accountability, fairness and transparency. all these reflect the fundamental values propagated in islamic finance that could serve as a stable and resilient form of financial intermediation. when islamic finance is applied in an appropriate and structured manner, it has a strong prospect to serve as a contributor to a sustainable global economic growth and financial stability. the infrastructure already established in islamic finance today is ready to serve as an effective intermediary for the conduct of global business including promoting greater intraregional trade not only within asia but between the various regions of emerging markets. with more than 600 islamic financial institutions that now operate in more than 75 countries, growing at an annual rate of about 15