encik abu hassan alshari yahaya : islamic finance - potential growth areas and challenges address by mr encik abdul rasheed ghaffour, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the 14th kuala lumpur islamic finance forum ( kliff ) 2017, kuala lumpur, 3 october 2017. * * * islamic finance the road ahead : meeting new challenges and opportunities last year at kliff, i talked about the need for the industry to reflect on its existing strengths ; and to build new capabilities to create new engines of growth within the industry. to seize various growth opportunities and to continuously reinvent ; re - energise ; and re - anchor the industry. today, i would like to elaborate on potential growth areas and challenges that are in store for islamic finance. without a doubt, islamic finance has made great strides both domestically and globally. we have witnessed the expansion of industry players – from a few financial institutions to a diverse set of players. customers that prescribe to islamic finance now, enjoy a wider range of financial products and services that meet their needs. globally, islamic finance has continued to grow to reach usd1. 9 trillion of financial assets in 2016 – with increased domestic market share for islamic banks in 18 countries1. within our shores, progress has been made at many fronts. the islamic banking share of assets has quadrupled from 7. 1 % in 2001 to 28 % in 2016. takaful penetration now stands at 14. 6 % of the population2. our presence in the global islamic finance system has made its mark largely in the global sukuk market, where we have sustained our position as the market leader with market share of more than 50 % over the last 10 years. domestically, our achievements have placed the malaysian islamic finance industry at the forefront. islamic finance continues to grow, but as it matures and enters the mainstream, the days of double digit annual growth are now behind us. beyond headline numbers, the industry must now seize opportunities in new growth areas ; reinforce the core strengths of islamic finance ; unlock its potential ; and realise its intended promises. aspiration for islamic finance ( if ) the question is – what lies in the road ahead for islamic finance? i would like to highlight three trends that are sweeping the world, which in turn offer opportunities for the islamic finance industry to capitalise on. first – is the rise of entrepreneurship. second – is the growing interest in halal economy ;

this is a window of opportunity for islamic finance to offer new solutions, and to prove itself as a viable channel to complement conventional financing solutions. shariah - compliant trade finance solutions can also provide the much needed support for the multi - billion dollar halal export industry that has increasing participation of smes. this can assist businesses to meet the strong demand for halal products and services globally. islamic finance already has a good head - start in the trade finance scene, with a wide range of islamic financial products that are now available to importers and exporters. more can be explored to widen the spectrum of shariah - compliant trade finance offerings and enhance trade finance facilitation by islamic finance players to spur greater cross - border trade, particularly by smes. to cite an example, enhancing the availability of trade credit takaful as a risk mitigant can help spur greater cross - border trade. i also believe that more can be done to deploy technology to untap the large business opportunities in trade, which includes the integration and digitalisation of trade finance as well as e - commerce. let me now conclude. the issue of sustainability is a matter of grave concern for the global community. if sustainable development takes a backseat, the global landscape in the future will look very different. we might see the gains that we have built and enjoyed over the decades erased. the clock is ticking, and the world has to act now. on its part, islamic finance must contribute towards generating solutions to this challenge. in this endeavour, steadfast commitment from the islamic finance industry to innovate ; to embrace fintech ; to invest in talent ; and to play a greater role in international trade is crucial. islamic finance must be a force for global good, proving that the sustainability agenda isn ’ t just good for the world, but is good for 4 / 5 bis central bankers'speeches business. it must prove the dictum “ doing well by doing good ”. this is what shariah calls us to do – to benefit the people and planet ; and bringing greater prosperity to the ummah. 5 / 5 bis central bankers'speeches