PROVE ISLAMIC FINANCE VIABLE ALTERNATIVE TO CONVENTIONAL SYSTEM, SAYS M'SIAN PM

KUALA LUMPUR, Nov 12 (Bernama) -- Prime Minister Abdullah Ahmad Badawi Tuesday
called on the Islamic financial community to prove to the global market that the
Islamic financial system is truly a robust and viable alternative to the
conventional system.

He said the current financial crisis provided the opportunity to
demonstrate
the uniqueness of the Islamic finance, thus the opportunity should be used
wisely.

"Nevertheless, the Islamic finance community should not be complacent or
unduly proud. We must continue to critically evaluate ourselves.

"For instance, have we truly established an alternative system or are we
still very much mimicking the established conventional system?" he said when
launching the International Shari'ah Research Academy For Islamic
Finance.

Abdullah said: "As we continue our work towards establishing Islamic
finance as a viable and competitive industry, we must also continue the work of
clarifying and resolving some issues which still call out for meaningful
solutions."

The text of his speech was read out by Minister in the Prime Minister's
Department Dr Ahmad Zahid Hamidi.

Abdullah said some of the Islamic finance products allowed in one Islamic
country was considered dubious in another.

"Of course, Islam allows for differences in the interpretation of the
shari'ah. However, there is clearly much more can be done to bring Islamic
finance as it is being practised in various different jurisdictions into greater
harmony," he said.

Another issue worth reviewing is the development and pricing of new Islamic
financial products, as in Malaysia where conventional and Islamic financial
systems run concurrently, the performance of conventional banking is still seen
to be ahead.

He said obviously one must consider the "first mover advantage" enjoyed by
the conventional banking system but taking this advantage into consideration,
investigation must continue in the means of making the Islamic banking system
more competitive compared to conventional.

As for the establishment of ISRA as a Centre for Research and Development
For The Islamic Finance Industry, he said Malaysia reaffirmed its commitment
towards the development of Islamic finance, especially in the area of knowledge
creation and innovation.

As a full-fledged research organisation, he said, ISRA would foster
collaboration between Muslim scholars in different countries to develop
knowledge in areas of specific interest to the global Islamic finance community
and in particular it would help find a middle ground for the standardisation of
Islamic finance parctices amongst Muslim countries.

Though new, ISRA has already been entrusted to undertake a number of
critical research projects by both local and overseas-based organisations,
including Malaysia-owned MNRB Holdings (formerly known as Malaysian
National Re-Insurance Berhad) and Al-Awael Centre For Economic Consultations,
Saudi Arabia.

"ISRA is now partnering itself with some highly reputable organisations,
notably the Organisation of Islamic Conference (OIC), Majma' Fiqh and Bahrain
Institute of Banking and Finance," he added.
-- BERNAMA