adnan zaylani mohamad zahid : islamic finance - powering regional prosperity speech by mr adnan zaylani mohamad zahid, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the ifn asia forum 2023, kuala lumpur, 2 october 2023. * * * distinguished speakers and delegates, assalamu'alaikum and good morning to all. it is my pleasure to be here again at this year's ifn asia forum that brings together islamic finance professionals from around the world. today, we face many challenges but despite that, the imf has projected asia, as a region, to contribute around 70 % of global growth this year1. strong domestic demand, accommodative financial conditions and improved investment prospects are among the factors that present ample opportunities for market players, consumers and stakeholders seeking to grow and mainstream islamic finance, to optimise asia's growth potential. as a region that houses almost a quarter share ( 23 % ) of the total islamic finance assets worldwide, asia remains a dynamic region and a key contributor to global islamic finance and economic growth. against this backdrop, i wish to focus my remarks today on two important priorities for islamic finance to promote regional prosperity : first, is to harness islamic finance to play a stronger role in regional financial intermediation ; and second, to deepen and enhance vibrancy of islamic financial markets as a key component of the global islamic financial system. islamic finance as a key contributor in regional financial intermediation asia is increasingly becoming a focal point for global trade and investment. there are shared goals and multiple interdependencies among asia economies, as with the rest of the world. i see three key prospects for the islamic finance industry to galvanise efforts in growing its regional intermediation capabilities : first, in supporting halal trade and investments. the global halal supply chain has expanded in tandem with growing consumer demand for halal products worldwide. the halal food industry, for instance, is expected to grow exponentially to reach usd 4 trillion by 20282. asia is also becoming a preferred destination for reshoring of manufacturing hubs where halal goods including food, pharmaceuticals, cosmetics, and more are produced. the industry can capitalise on these growth opportunities to offer a diverse range of financial products and services. in malaysia, the use of islamic bank financing by halal certified companies have doubled between 2018 and 2021 with solutions

rapid growth will have major economic and social consequences in many countries. many nations are finding it increasingly difficult to provide adequately for this segment of the population through state - provided social security. planning for retirement has therefore become essential both for individuals as well as public policy to ensure sustainable financing to meet retirement and healthcare needs in the long term. an enhanced social safety net would foster greater security in addition to reducing the need for significant precautionary savings. this would in turn promote increased consumption spending. prospects for higher insurance penetration rate in the region continue to remain positive. in 2008, insurance premiums accounted for 5. 95 % of gross domestic product ( gdp ) in asia and 3. 57 % of gdp in africa compared to 7. 29 % in america and 7. 46 % in europe. the changing priorities of the growing population in the region, largely comprising of a young workforce in the middle income group, have also enhanced the demand for investment - linked and wealth management products. these opportunities require strategies to increase the accessibility of insurance products. worldwide, insurers have successfully leveraged on bancassurance and internet channels to enhance insurance penetration. in malaysia, insurers can now freely enter into bancassurance arrangements with banking institutions and extend their branch network based on the liberalisation measures announced in april this year. in the more recent period, the role of insurance becomes increasingly more important, with the increasing frequency of catastrophies that have been associated with global climate change and pandemics. according to a recent study, economic losses caused by natural and man - made catastrophes around the world in 2008 amounted to usd269 billion. asia accounted for the top five worst catastrophes in terms of fatalities in 2008. the recent natural disasters in southeast asia and the pacific islands have also resulted in major destructions. public - private partnership between government and the insurance industry in providing appropriate insurance schemes and developing risk mitigating mechanisms are needed to cope with these losses. greater collaborative efforts among industry players in the region in the form of technical assistance and pooling of resources will increase capacity and expertise to underwrite such risks. through such collaboration, the ability for the insurance industry to underwrite and reinsure risks based on the requirements of the region can be significantly enhanced. the growth of the takaful sector has also been commendable over these recent few years. between 2004 and 2007, the average annual growth rate of the global takaful industry is estimated at 25 %,