as innovative and competitive as any other alternatives offered by the financial market. the shariah aspect of the products must be recognized and accepted by the majority of players practicing islamic finance. the supply and ability to attract and retain talent, not only in shariah area and islamic finance, but also those who are conversant in it, legal, accounting, risk management and communication. the next level of development will probably entail the enhancement of linkages between various centers, be it in the financial markets, credits or investment of funds. the various islamic finance centers operating around the globe must operate as one! we should allow a diversified number of players to operate in our market. recognising the benefits of foreign competition and presence, we have announced a further opening of the malaysian financial system to new players. islamic banking market share in terms of asset vis - a - vis total banking asset as at the end of 2009 is 19. 6 % ( 2000 : 6. 9 % ) including dfis. this data is very close to our target of 20 % by the end of 2010. domestic islamic banks accounted for about 85 % of market share in islamic banking sector. annual growth rate of islamic banking assets was 20. 8 % per annum for the years 2000 to 2009. for takaful, the market share, although still small, it has shown significant progress of 7. 9 % and 11. 09 % in terms of asset & contribution respectively. annual growth rate of takaful assets was 24. 2 % per annum ( 2000 – 2009 ). total financial assets had also increase significantly. the islamic sukuk is larger than the conventional pds. what are the factors that contributed to the development of islamic finance in malaysia? one of the factors is a comprehensive legal, tax, accounting, regulatory and supervisory framework and this are well articulated and generally known. let me attempt a few additional factors that might not be that well appreciated. it is the willingness of the players and the developers of islamic finance to explore new initiatives. when we embark into this journey during the early 1980s there was no precedent to follow. we did not wait until we were 100 % sure or until we were sure we could tackle all the possible issues that might arise. some might say that this is a “ trial and error ” method. but history has taught us that many break through ideas and solutions originated from this approach. the willingness to try new things and the ability to move on should an idea doesn ’

t work is an important attribute. it pays over the long run. the willingness to use existing resources that had served the financial system well is another contributing factor. malaysia has already in place an efficient custodian, payment and settlement system, the principal dealership system, the real time gross settlement system and the process of tendering of government securities. all this has a proven track record of being effective and efficient. we avoid “ reinventing the wheel ” because it is costly, time consuming and risky if we create an entirely new approach. we adopt and adapt with the existing system so long it does not contravene any shariah principle or requirement. willingness of shariah scholars to practice ijtihad is another contributing factor. the courage to set a precedent and the resolve to agree to a new concept never done before. for example, in the establishment of shariah parameters and centralization of shariah rulings and the creation of financial instruments that the central bank used to mop up liquidity from the financial market on a daily basis. the forward looking plan of our various institutions of higher learning to offer courses in islamic finance related subjects that have enable a steady supply of talent and workforce to the industry. equity - based financing let me touch on the subject of equity - based financing. this subject has captured the imagination of many especially within the academic circles. some even went to the extent of saying equity - based financing is the heart and soul of islamic finance. this is a point that will invite a lot of comments and a subject of endless conversation. in practice, somehow, bankers are not into this. in malaysia and in the middle east, however, more than 70 % are debt - based financing. why is this so? let me discuss this point with greater detail. for the benefit of those who are less familiar, in a nutshell mudharaba is a profit sharing and loss bearing concept where the financier provides financial investment in a business and the entrepreneur provides expertise in running the business. the financier gets to share profits and absorb loses and the entrepreneur have a share of the profit musharaka is where both financier and entrepreneur commit to invest financially in a business. in both cases, the profits and losses are shared according to ratios that both financier and entrepreneur agrees prior to the venture. in practice, these financing concepts can cover several aspects. banks invest in a business venture with an entrepreneur and receive profit / loss sharing (