. in malaysia, there is a greater foreign institutional presence and substantial foreign participation in malaysia ’ s islamic financial system. similarly, there has been an increased of foreign participants to raise and invest funds in malaysia ’ s financial markets. the global sukuk market, growing at an average annual rate of about 40 percent has also been a significant platform for such investors, as it effectively intermediates funds across borders, thereby fostering international financial and economic inter - linkages. as the internationalisation of islamic finance widens the spheres within which islamic finance operates in, there are growing opportunities and challenges in the business environment that sets the current backdrop for islamic finance. continuous capacity and capability measures will be pursued to provide an enabling environment for industry players to remain competitive and innovative. given that the recent financial turmoil has highlighted the importance of strong liquidity risk management, an important recent development to assist in the liquidity management of islamic financial institutions is the establishment of the international islamic liquidity management corporation ( iilm ). the iilm has begun its operations in kuala lumpur from early february this year, following its official launch in october 2010. the iilm is tasked to issue short - term multi - currency liquidity instruments that would facilitate the cross - border liquidity management between financial centres, and by doing so, would enhance financial inter - linkages. the first issuance of liquidity instruments is expected to take place later during the year and is very much anticipated as it would contribute to more efficient management of financial flows across borders, thereby leading towards more efficient internationalisation of islamic finance. the islamic finance industry is at a stage of growth in terms of products and services, which requires innovation to remain as the driving force behind the progress of the industry. in the pursuit of innovation, it is paramount that the islamic banking and takaful industry achieve full shariah compliance in the development and application of their products and services. a robust shariah governance framework is therefore an important foundation for the islamic financial institutions to ensure that its objectives and operations are in accordance with shariah principles. in malaysia, there have been recent enhancements to the shariah governance that aim to further strengthen the existing shariah governance process, decision making, accountability and independence of shariah advisories. reinforcements of the shariah compliance functions include the requirements for internal shariah review and audit, supported by an appropriate risk management process and research capability. it is envisaged that with a more robust and sound sha

facilitated the trade in goods from the east to the west, we can now envisage the new silk road that facilitates financial flows across borders between the east and west. as regional financial integration intensifies, it will be a route that will facilitate this process. the previous trade linkages between the middle east and asian regions also has potential to strengthen, being the two of the fastest growing regions in the global economy. while the world trade has on the average expanded by 9 percent over the period 2002 - 2006, asia's trade with the middle east has increased on the average by 30 percent. in 2006 alone, mega transactions involving corporate acquisitions and real estate purchases from the gulf to asia, are estimated to total more than usd18 billion. going forward, the value of such investments are expected to increase. over the next five years, it is estimated that asia will need usd1 trillion in terms of infrastructure investment and is in search of new partnerships and strategic investors to co - invest in these undertakings. this trend would benefit the economic regions with high savings and surpluses such as asia and the middle east because it would promote intermediation of a part of the surplus funds in the region to be channelled to productive investments in the region. several financial centres in the west, middle east and asia are now introducing islamic finance as an integral part of their financial markets to offer the wide range of financial products and services. this trend is envisaged to stretch the new silk road from east asia and middle east and extend to europe and the rest of the world. indeed, we are already seeing the participation of global investors and the international financial community. the malaysian experience let me share with you malaysia's experience in developing on islamic financial system in a highly liberalised environment. malaysia has developed a comprehensive islamic financial system that includes the banking and takaful industries, and the islamic money and capital markets a€ “ a matrix which mutually reinforces the integrity and stability of the islamic financial system. significant progress has in particular, been achieved, in the development of the malaysian sukuk, or islamic bond market. the malaysian sukuk market has now evolved into the world's largest islamic bond market. in 2007, malaysia accounted for about two third of the global sukuk outstanding amounting to about usd47 billion. in 2002, the government of malaysia issued the first global sovereign sukuk. with this issuance, it became an international benchmark for the issuance of global