CALL TO IMPROVE RESILIENCE OF ISLAMIC FINANCE

KUALA LUMPUR, March 3 (Bernama) -- The global financial crisis calls for
more concerted efforts to bring Islamic finance to a higher level of resilience,
Malaysia's Central Bank governor Dr Akhtar Aziz said Tuesday.

"Of importance, in this process, is to embrace the values of Islamic finance
of justice and fairness that benefits the society and the system," Zeti said at
the launch of Public Islamic Bank Bhd here.

"It is thus important for Islamic finance to transcend beyond just the
pursuit of growth and monetary performance but also to emphasise ethical market
conduct practices," she said.

Zeti said financial innovation, as shown in the recent crisis, has led to
adverse consequences for the economy.

She said by learning from the lessons, the process of innovation in the
formulation of Islamic financial products and services must be done carefully
and in accordance with Syariah and to take into account the distinct risk
characteristics of Islamic banking.

Zeti said for more than two decades, the Islamic financial system in
Malaysia has gradually transformed into a comprehensive Islamic financial
landscape.

"This has been reinforced by a legal and regulatory framework, the essential
financial infrastructure, and an environment conducive for product innovation,"
she said.

According to Zeti, there is also a need for continuous investment in human
capital development in the Islamic financial services industry.

"It is important for the industry to continually promote human capital
development and expertise to create a larger pool of experts and high calibre
professionals," she said.

"This involves enlarging not only the existing talent pool, but also
building a robust pipeline of skilled human resources for the future."

On the launch of Public Islamic Bank, Zeti said the continued progress of
Islamic finance in Malaysian financial system demonstrated that despite the
ongoing global financial crisis, it has not discouraged the further expansion
and development of Islamic finance.

She said the underlying philosophy for the incorporation of an Islamic
subsidiary is mainly aimed at further strengthening the institutional structure
for Islamic banking business operations.

"Financial institutions, which have achieved a critical mass in their
Islamic banking business, have migrated from their Islamic banking window
operations to an Islamic subsidiary," the governor said.

"The establishment of Islamic subsidiary has greater potential to complement
the goals of the banking group by providing business flexibility and autonomy to
the Islamic subsidiary," she said.

Currently,the Islamic banking system in Malaysia has successfully positioned
itself as a robust and competitive component of the financial system, Zeti said.

Malaysia now has a total of 17 Islamic banks, of which nine are subsidiaries
of domestic banking groups.

She said Islamic banking assets now accounted for 17.4 percent of the total
banking assets of the Malaysian financial system while in the bond market, the
sukuk market constituted 57 percent of the total market as at end-2008.
-- BERNAMA