marzunisham omar : supporting the robust growth of islamic finance in malaysia welcoming remarks by mr marzunisham omar, assistant governor of the central bank of malaysia ( bank negara malaysia ), at malaysia country showcase - ifsb summit 2017, kuala lumpur, 22 october 2017. * * * welcome to malaysia country showcase. i would like to express my sincere appreciation to all of you for being here today. i hope that today ’ s showcase will enhance your understanding of the critical role that professional ancillary services and talent development institutions play in supporting the robust growth of islamic finance in malaysia. indeed, these professional services, which include shariah consultancy, legal, accounting and talent development, are an integral part that make up malaysia ’ s vibrant islamic finance system. with islamic finance fast gaining a strong foothold in many countries, malaysia hopes to be able to contribute to this dynamic phase of islamic finance development by providing an array of reliable, high quality professional services ; one that is backed by decades of experience. today, malaysia has a competitive islamic finance that forms part of the mainstream financial system. islamic banking assets now account for 28 % of malaysia ’ s total banking assets, while more than half of our bond market comprises sukuk. we have a diverse range of islamic financial institutions, both domestic and foreign, which provide competitive, innovative products to meet the varied and unique needs of individuals and businesses. what we have today was not built overnight. the islamic finance journey in malaysia has been long and its beginnings were humble. it is the product of three decades ’ work in building strong foundations for the sector to thrive and grow. in reflecting on our journey of developing a vibrant islamic financial system, imperatives in three areas stand out – infrastructure ; players ; and talent. allow me to briefly elaborate on these three areas. first, infrastructure. similar to developing a conventional financial system, having a robust regulatory and supervisory regime is critical for the development of a strong, resilient and inclusive islamic financial system. what is unique about islamic finance is the need for a clear shariah governance framework to ensure shariah compliance. in malaysia, the islamic financial services act 2013 sets out a regulatory framework for end - to - end shariah compliance. bank negara malaysia is vested with comprehensive legal powers under this act to regulate and supervise the islamic financial system. complementary to this is the role of the shariah advisory council in ensuring greater certainty in shariah. while our sharia

migrants ( in courier services and construction ) has surged over this period, companies still experience a deficit of labour migrants. consequently, the rise in the demand for labour in various groups of employees is translating into the steady increase in nominal wages. in the course of the discussions preceding our today ’ s decision, several executives of our regional branches stressed that increasingly more companies were forced to raise wages at a double digit pace to be able to retain their employees. the staff shortage is a factor limiting enterprises ’ capacities to expand output. it is hard for them to catch up with growing demand. this suggests that proinflationary risks brought about by labour market gaps are strengthening. monetary conditions continue adjusting to our earlier decisions on the key rate. after the meeting in october, nominal interest rates, including on federal government bonds, deposits, and loans, continued to go up. yields on federal government bonds rose over the entire curve. the growth of short - term yields has been mostly driven by the increase in the key rate and the updated forecast of its further path, whereas long - term yields are largely influenced by the escalation of geopolitical tensions. nominal interest rates on loans and deposits are rising. however, given the current level of inflation and inflation expectations, monetary conditions remain neutral in the meantime. this is evidenced by the persistently high growth rates in lending, as well as the still slow rise in deposits. businesses and households continue to demonstrate high demand for loans. nonetheless, the increase in unsecured consumer lending has started to slow down, which was promoted by additional macroprudential limits on high risk loans imposed on 1 october. as regards ruble - denominated time deposits, their growth in november — the first ten days of december continued, but its pace is still as slow as in october. on the one hand, higher interest rates make time deposits a more attractive savings instrument. on the other hand, banks artificially limit depositors ’ opportunities to use these new, more profitable offers. banks offer different deposit terms for the so - called ‘ old ’ and ‘ new ’ money. there are barriers in the form of fees that depositors need to pay to transfer their funds from one bank into another. we believe that such differentiation, or to be more exact, discrimination is inappropriate and have already proposed a number of initiatives to eliminate it. we hope that legislative authorities will support 2 / 4 bis central bankers'speeches our ideas. this will not only protect bank customers ’ rights,