ravi menon : the next phase in islamic finance opening address by mr ravi menon, managing director of the monetary authority of singapore, at the 3rd annual world islamic banking conference : asia summit ( wibc asia 2011 ), singapore, 5 june 2012. * * * dr ahmad mohamed ali al - madani, president, islamic development bank, your excellencies, distinguished guests, ladies and gentlemen, good morning. and to all our foreign guests, a warm welcome to singapore. an increasingly difficult conjuncture we are meeting here for the 3rd annual world islamic banking conference asia summit, at a time of increasing stress in the global economy and financial system. • the effects of monetary stimulus, which had helped to support the economy and prevent a full - blown financial crisis, are now levelling off in both the eurozone and the us. • the labour market remains a significant drag on growth in the advanced economies. unemployment has hit new highs in the eurozone while employment and production numbers in the us are showing signs of weakness. • the story of a two - speed global economy is coming under strain, with demand weakening across emerging asia. the moderation in china ’ s economic growth appears to be somewhat sharper than expected. india is undergoing an even more pronounced and broad - based slowdown. but the key risk that has increased in recent months and poses the biggest threat to global economic prospects is the situation in europe. • greece is preparing for a historic election that may well decide its future in the eurozone. • spain is experiencing severe strains in its banking system against a backdrop of a sharp reduction in gdp, high unemployment, and a deteriorating real estate sector. • italy and spain are facing higher sovereign borrowing costs that threaten fiscal sustainability. to be fair, eurozone governments have been taking extraordinary measures to help stabilise the situation, reduce fiscal deficits, and restore growth. but they have reached a turning point where bolder, decisive actions will be needed to reverse the tide. the next few weeks and months will be critical. islamic finance : challenges to overcome let me turn now to the subject of our conference. islamic finance has shown remarkable resilience during the last five years – perhaps the most challenging economic environment in the post - war era. the industry has grown by an estimated 20 % annually in the last five years to reach us $ 1. 3 trillion in total assets in 2011. islamic banks have grown both in number and in scope. bis central bankers ’ speeches but the sustained

will form within asia as a result of this integration. in 1990, 20 years ago, the developed economies dominated the world trade map. europe was responsible for over half of the world ’ s exports, although these were mainly intra - europe flows. in 2010, this map has changed with the global shift in manufacturing to asia, with china accounting for 9 out of the top 25 bilateral trade routes by value. by 2030, 20 years from now, the centre of gravity of global trade patterns is projected to shift even further to within asia, with china accounting for 17 out of the top 25 bilateral trade routes, overtaking trade links between developed countries like japan - usa, germany - usa that will grow but they will grow much more slowly. within asia, trade patterns will evolve. with increasing urbanisation and consumer demand, china ’ s trade with developed asia, will change. it will start to import relatively more finished bis central bankers ’ speeches consumer goods from japan, korea and singapore. these bilateral trade routes are not new, but they will rise in importance. china ’ s trade with developing asia, particularly with malaysia, thailand and indonesia, will propel these bilateral trade routes into the top 25 bilateral trade routes by 2030. indonesia in particular, with low wage costs and proximity to china, is well placed to become the next manufacturing hub and sell low - end manufactured products back to the chinese. the shift in centre of gravity of world trade to asia is more than a china story. as developing asian economies become wealthier, they will consume more and trade more with each other. for example, bilateral trade between thailand and indonesia is projected to be almost five times as high in 2030 as it was in 2009. to support this asian integration, countries in asia have already come together on regional platforms to foster greater openness and cooperation. for example, asean has concluded free trade agreements ( ftas ) with australia, new zealand, china, korea, japan, and india. the asean - china fta alone covers over 1. 9 billion consumers and an estimated trade volume of us $ 1. 2 trillion. as asia grows and comes together economically, global companies that aim to have a share of the pie will have to develop strategies and production models that are customised for asia. singapore exists at the confluence of these emerging trade routes within asia and as well as between asia and other regions. we have positioned ourselves as global - asia hub to take advantage of asia ’ s growth. our strategic location