By Kisho Kumari Sucedaram
KUALA LUMPUR, June 7 (Bernama) — The newly launched Malaysia International Islamic Finance Centre (MIFC) Leadership Council (MLC) Position Paper holds the key to ushering in a new era of growth and burgeoning potentials in Islamic finance against the backdrop of the sector that makes up one per cent of global financial assets of US$450 trillion (US$1=RM4.69).
MLC chairman Tan Sri Azman Mokhtar stressed Malaysia’s pivotal role in this narrative, highlighting the nation’s significant and huge potential for expansion within the global Islamic finance landscape.
“It is also in this context that this position paper has three principal objectives, namely first, to take stock of the current state of development of Islamic finance in Malaysia and beyond, and second, to review and identify the case for change in light of existing challenges and opportunities based on current and future trends and developments in Malaysia and the world,” he told Bernama recently.
The third objective, he said, was to make distinctive and actionable recommendations for policymakers, industry players, regulators, and scholars to chart a new wave required to take Islamic finance and the overall discipline of finance itself to better serve the real economy, and build a more just and progressive society.
“There are a lot of potential things available in Islamic finance that we have not fully unlocked, hence, the position paper would play a critical role in bringing everybody together to catalyse certain impactful projects,” he said.
Islamic Finance Position in Malaysia
Azman explained that the Islamic banking industry’s share of total financing in the Malaysian financial system has increased significantly, experiencing substantial growth since its inception in 1983.
Meanwhile, Islamic capital markets contributed to 64.4 per cent of the equity and debt capital market in 2023.
He also pointed out that Malaysia has been ranked first in the Islamic Financial Development Indicator 2023, Global Islamic Economy Indicator 2023/2024 and Global Islamic Fintech (GIFT) Index 2023/2024.
“Islamic finance has become the bedrock of a stable and progressive financial system, successfully anchoring Malaysia’s journey of growth and development over our post-Merdeka period,” he said.
Hence, he stressed Malaysia is well poised to capture the opportunities that come with the current limitations of the global financial system.
He said this is well supported by a comprehensive and proven Shariah-compliant system, strong and experienced financial regulators, namely Bank Negara Malaysia (BNM), Securities Commissions Malaysia (SC) and Bursa Malaysia, as well as a strong institutional base, including Petronas and government-linked investment companies.
MLC Position Paper
In view of this, Azman said the position paper identifies the current limitations of Islamic finance and proposes a set of principles for change that emphasises the importance of inclusivity, sustainability and ethical practices in shaping the future of Islamic finance.
“That is why we have come up with 10 MLC Key Focus Areas and presented 18 initial MLC Impact Projects, which serve as tangible initiatives for the Islamic finance industry to adopt.
“The projects encompass several areas, including social impact investment, digital innovation and talent development,” he said.
In fact, he said MLC has started working with a few countries, whereby the council has exchanged memorandums of cooperation with its counterparts from Indonesia, Hong Kong, Turkiye, and the United Kingdom to emphasise Islamic finance product innovation, promote cross-border trade and financial activities, and enhance capacity building and education.
The MLC was established in October 2022 as a joint initiative of BNM and the SC to drive the next development phase in positioning Malaysia as an international Islamic financial centre.
The council serves as a platform to provide industry stewardship in enhancing Malaysia’s proposition as a global marketplace and an international gateway for Islamic finance.
Last week, Prime Minister Datuk Seri Anwar Ibrahim launched the MLC Position Paper titled “Establishing Islah through Islamic Finance”, advocating for reform and the restoration (“islah”) of the economy and society through Islamic finance.
Azman added that the new “islah” curve for Islamic finance will further advance Malaysia’s national aspirations and contribute to the “ummah” and the world in making finance and Islamic finance serve the real economy towards a more just, sustainable and progressive society.
— BERNAMA
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