. these complement our efforts to further strengthen the institutional infrastructure of our takaful industry by increasing the diversity and strength of players in the islamic financial system. the emergence of aia afg takaful bhd. in the islamic financial landscape is therefore timely to further inject the competitive element that would propel the growth of the takaful industry. this is particularly so, as part of malaysia ’ s recent liberalisation measures aim to develop a resilient, diversified and efficient financial sector with financial institutions that are in greater state of readiness to compete in a more liberalised and challenging environment. the granting of four new family takaful licenses by bank negara in 2009 is also complementary of bank negara ’ s initiatives of promoting the establishment of a core of robust industry players that could heighten competition and spur innovation in the takaful industry. the commencement of aia afg takaful bhd., being the second takaful operator to be launched among the new licensees, offers strong value propositions and is envisioned to further enhance the development of the family takaful industry in malaysia, namely in penetrating untapped areas of business within the family takaful industry, such as microtakaful, medical and retirement products. this would certainly enhance the breadth and depth of family takaful products available in the market, thereby widening the financial safety net of the general population. the establishment of the two additional takaful joint ventures that would insyaallah, be in operations by the end of this year would also reinforce the competitive element and innovation in the takaful industry. on the regulatory front, regulations for the takaful industry will continue to focus on ensuring effective risk management in the product development process and operations of takaful operators. the takaful industry has been progressively on its track to fully embark on the principle and risk - based supervisory approach that has been implemented for the insurance sector. this is seen by the recent issuance of the guidelines on takaful operational framework, which establishes principles governing the operational processes of takaful business to ensure that business activities and innovations are within the takaful operator ’ s risk management capacity. with effective discharge of takaful operators ’ duties, the interests of takaful stakeholders will be safeguarded as the guidelines place emphasis on sound management to ensure sustainability of takaful operators. a robust shariah governance framework is another important element to assist the takaful industry in

net contribution, as compared to general takaful products that dominated a share of 63 percent back in 1984. the takaful industry exhibits high potential, as demonstrated by its robust expansion with annual growth rate of total assets and contributions averaging between 20 percent and 26 percent over the period of 2004 to 2009. globally, malaysia also signifies its presence in the takaful market, being the second largest takaful market in the world as its total assets of us $ 3. 2 billion dominated 26 percent of total global takaful assets in 2009. whilst sustaining the current pace of development, growth prospect remains strong for the takaful sector, in view of the large untapped potential, where out of the 53. 5 percent market penetration rate for both takaful and insurance, the market penetration rate for takaful was merely 10. 9 percent in september 2010. the takaful industry indeed represents an important component in the overall islamic financial system. given its role in providing risk protection, the takaful industry offers a suite of financial products and services that complement the existing range available for consumers. in recognising its importance, focus has been given in developing a dynamic and vibrant takaful industry within our islamic financial system. where the industry is today has been an outcome of an accumulation of efforts in instituting a comprehensive islamic financial landscape in malaysia ’ s financial system. a strong institutional infrastructure and effective legal, regulatory and shariah framework are the underpinnings of our islamic bis central bankers ’ speeches financial industry. in our pursuit to develop islamic finance, the recent enhancement to the central banking act has accorded formal recognition to the existence of islamic finance as an arm of the dual financial system, thereby giving significance and due prominence to islamic finance. moving forward, a number of initiatives are planned to further enhance the competitiveness and growth momentum of the takaful industry, emphasising on enhancement of the regulatory and supervisory framework and the shariah governance framework. such initiatives are laid down for industry players to capitalise on, to achieve sustainable success and to unleash their potential gains both locally and abroad. in light of this, allow me to share my thoughts on some key focus areas and developments which embed our aspirations on the future direction of the takaful industry. against a backdrop of growing opportunities and challenges as the business environment becomes more intensified and challenging, capacity and capability building measures for industry players to compete effectively and efficiently will continue to be pursued