zeti akhtar aziz : fostering leadership role in islamic finance speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launching of hong leong islamic bank berhad - “ fostering leadership role in islamic finance ”, kuala lumpur, 19 july 2005. * * * bismillahirrahmanirrahim y. bhg. tan sri quek leng chan, chairman of hong leong bank and hong leong islamic bank encik daud abdullah, managing director, hong leong islamic bank ladies and gentlemen, it is my pleasure to be here today to commemorate the official launch of " hong leong islamic bank berhad ". this establishment of the islamic subsidiary represents the on - going institutional transformation in the islamic banking system in our islamic financial system. the underlying philosophy for the incorporation of an islamic subsidiary is for the further strengthening the institutional structure for islamic banking business operations. the emergence of hong leong islamic bank in the islamic financial landscape will further increase the diversity of players in the islamic financial system and enhance its potential to contribute to the further development of our islamic financial services industry. ladies and gentlemen, today, the islamic financial services industry in malaysia has emerged as a viable and competitive component of the financial system that contributes towards enhancing wealth creation and the nation's economic development. the advancement and progress that have been achieved thus far have opened new frontiers for the islamic financial services industry. the broad strategies that have been adopted as outlined in the financial sector master plan and the actions and initiatives taken leading to the rapid development and growth of the domestic islamic banking industry have all contributed to the achievements we have realised today. indeed, the recent two years have seen the islamic financial landscape being significantly redefined the establishment of islamic subsidiaries, the issue of new licences to foreign players, and the initiatives of our domestic institutions to venture abroad. these developments have increased the potential for international integration of our islamic financial system. the liberalisation of our domestic bond market to allow multilateral and multinational corporations to raise ringgit denominated instruments in our market has also expanded the volume of islamic instruments in our financial markets. more recently, an islamic equity index was introduced increasing further the potential for the deepening of the domestic capital market. in the area of shariah, bank negara malaysia has introduced the shariah governance framework in april this year as one of the initiatives to strengthen the role and involvement of the shariah scholars in the

development of islamic finance. today, a larger pool of shariah scholars has been created to better serve the needs of the industry and the plan is to further develop them to emerge as prominent scholars who can serve both domestic and international islamic financial communities. recently, bank negara malaysia also organized a closed - door shariah scholars dialogue attended by fifty prominent local and foreign scholars. this dialogue will now be held annually to serve as a platform for cooperation among the shariah scholars to promote greater understanding on emerging developments across the world in the area of islamic finance. this is to promote a greater understanding on the approaches taken by different jurisdictions in their shariah interpretations. to support the shariah scholars'activities especially in the areas of research and capacity building, bank negara malaysia has also allocated a rm200 million endowment fund to meet the financing requirements of the shariah scholars'dialogue research activities and the provision of scholarships. it is hoped that this will contribute towards greater understanding in the process of harmonizing the international implementation of shariah in islamic finance. these initiatives have contributed to the success in the creation of a robust islamic financial environment. it is further supported by the requisite financial infrastructure that includes the financial markets and that is reinforced further by a comprehensive regulatory, prudential, legal and accounting 1 / 2 framework. these elements have provided an enabling environment that increases the potential for malaysia to evolve as an islamic financial centre. these measures, however, need to be reinforced by efforts by the islamic financial institutions to take on a more active role in promoting islamic finance. indeed, the rapid progress of islamic banking over the last two decades would not have been possible without the pioneering efforts of the islamic financial institutions in building up a successful and vibrant industry. in conjunction with the 30th meeting of the board of governors of the islamic development bank in june this year, an initiative was taken to develop a ten - year master plan for the islamic financial services industry. the master plan for the global development of islamic finance is now being finalised by the committee established by the islamic development bank and the islamic financial services board. the plan will provide the strategic direction envisioned for the development of islamic financial services, looking beyond the near term and taking a longer - term perspective into the needs and requirements of the future. islamic financial institutions thus need to adopt a positive approach in re - inventing themselves to meet the emerging issues, challenges and opportunities. in the domestic islamic financial sector, despite the achievements that have been