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Saudi Arabia, Malaysia discuss Islamic finance

/ 11 October 2010

A Malaysia International Finance Centre (MIFC) delegation, headed by Raja Nazrin Shah, crown prince of Perak, visited Saudi Arabia recently to promote Islamic finance relations. The 33-member delegation included representatives of 17 Islamic banks and 12 Islamic fund management companies and some asset management firms, aside from Takaful operators, and legal and other professional services firms.

It  included Tan Sri Zarinah Binti, chairman, Securities Commission, Malaysia; Mohammed Razif Abd Kadir, deputy governor of Bank Negara Malaysia; Danial Mah Bin Abdullah, deputy director general, Labuan Financial Services Authority; Khazanah Nasional and representatives of Bursa Malaysia, Affin Islamic Bank, Maybank Islamic, Amislamic Bank, Muamalat Malaysia, CIMB Islamic Bank and Al-Rajhi Baking & Investment Corporation (Malaysia). Also in the entourage were Raja Eleena Binti Raja Azlan Shah and her husband Farouk Abdullah.

Malaysian Consul General Hidayat Abdul Hamid said the delegation was in the Kingdom to introduce the MIFC to this part of the world and study the opportunities available specifically in the financial and investment sectors. “They would like to invite their Saudi counterparts to Malaysia for further interaction,” he added.

Osama Fadaak of Attam Est. Commercial Services hosted a reception in honour of the crown prince and his entourage at his residence, which was attended by prominent Saudi businessmen and investors. Raja Nazrin, who is also the financial ambassador of MIFC, which is an initiative to position Malaysia as a hub for Islamic finance, and his delegation discussed bilateral issues and investment opportunities in both countries. The delegation also held discussions with high-ranking ministerial and financial agency officials in Riyadh.The research interests of the Perak crown prince, who has a rich academic and intellectual background including a PhD in political economy and government from Harvard University, are in the area of economic and political development in Southeast and Northeast Asia, historical national income accounting and economic growth in developing countries. He has also written articles and spoken on a wide range of issues including the role of the constitutional monarchy in Malaysia, education, Islam, ethnic relations and economic development.

The discussions centered on promoting  business and investment opportunities in Islamic finance in Malaysia, which is globally acknowledged for its highly-developed and diversified Islamic banking and financial market. Delegation leader Yusry Yusoff, manager, MIFC Promotions Unit at Bank Negara Malaysia (central bank of Malaysia), explained that the delegation was seeking to establish relationship with the key institutional investors in Saudi Arabia for potential investment opportunities including sukuk mandate, asset management, as well as interest to set up Islamic banking and Takaful business in Malaysia.”

He said the MIFC was launched in August 2006 to position Malaysia in the forefront of Islamic finance. He added that the centre  aims to strengthen the international linkages and capitalise the rapid development of the global Islamic finance industry. He explained that MIFC is a collaborative effort by Malaysia’s financial and market regulators including Bank Negara Malaysia, Securities Commission Malaysia, Labuan Offshore Financial Services Authority and Bursa Malaysia (Malaysia stock exchange) together with industry participation from the banking, Takaful and capital market sectors in Malaysia.

One of the mandates of the Centre  is to strengthen the international linkages in the global Islamic financial system with leading financial centres in the Gulf, especially Saudi Arabia. The discussions were envisaged to pave the way for cross border collaboration between MIFC and stakeholders in Saudi Arabia. The  visiting Malaysian officials said Islamic finance is becoming mainstream and offers a viable solution to the global financial system. There has been emerging interest from key financial centres in London, Hong Kong and France. The delegation also highlighted  the International Centre for Education in Islamic Finance, a university established by the Central Bank of Malaysia for focusing on development of talents for Islamic finance.

With the sukuk market acquiring going global dimensions market education and knowledge, especially of Islamic Capital Markets (ICM), becomes a necessity. This is met by theIslamic Markets Programme (IMP), which is held annually by the Securities Industry Development Corporation (SIDC), the training and development arm of the Securities Commission Malaysia (SC).

It aims at helping participants to analyse the philosophy and fundamentals of ICM and to distinguish between its various products; to evaluate Islamic equity, sukuk and derivatives as alternatives means of financing and investment to conventional products; and to assess the significance and essentials of corporate governance, risk management and sound regulation in promoting Islamic markets. So far,  175 participants from 27 countries all over the world, including Qatar,  have participated in the programme.

(Views expressed by the author are his own and do not reflect the newspaper’s policy.)

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