A STRONG ISLAMIC FINANCE SECTOR HAS GIVEN MALAYSIA AN EDGE

From Premalatha Jayaraman

MANAMA (BAHRAIN), Oct 16 (Bernama) -- The presence of a strong Islamic
finance sector alongside with conventional finance has contributed to Malaysia's
capacity to weather shocks to the financial system, said the Crown Prince of
northern state of Perak, Raja Dr Nazrin Shah.

Since the Asian financial crisis a decade ago, Malaysia has taken steps to
strengthen its financial system, with its regulatory and supervisory framework
significantly improved with greater corporate governance and improved risk
management practices, said Raja Dr Nazrin in his keynote address at the
Malaysia-Bahrain Investment Forum held here Thursday.

The event was held in conjunction with the Malaysia International Islamic
Financial Centre (MIFC) road show to Qatar and Bahrain led by Raja Dr Nazrin,
who is also MIFC's financial ambassador.

More than 80 Malaysian delegates are participating in the road show which is
aimed at studying and discussing the potential of Islamic finance and its
benefits.

"While Malaysia has not been spared the effects of the financial crisis, the
effects have been felt mainly in the real sector of the economy due to the
contraction in demand for our exports.

"Malaysia's financial sector remains strong and financial intermediation has
not been interrupted. Credit flows have continued to support the domestic
economy," he said.

"We in Malaysia believe there is tremendous upside potential for Islamic
finance. We believe the current financial turmoil provides an opportunity for
Islamic finance to position itself as a complement, if not alternative, to
conventional finance by providing investors with other asset classes and
markets that provide stability," he said.

He said the syariah principles which underline Islamic finance have
contributed towards its stability and resilience and these principles have made
Islamic financial institutions less vulnerable to instability and less prone to
frequent financial crisis.

Citing an example, he said the syariah injunctions that prohibit excessive
leverage and speculative financial activities have limited the exposure of
Islamic funds to the meltdown of the financial system in the United States and
Europe.

It therefore comes as no surprise that Islamic financial institutions have
weathered the global economic downturn better than their conventional
counterparts, he explained.

Raja Dr Nazrin also pointed out that Malaysia remained competitive in the
global business market, ranking 24th in the Global Competitiveness Report
2009-2010 by the World Economic Forum.

It also came out the third most attractive investment destination for shared
services and outsourcing activities for the second consecutive year in A.T.
Kearney's Offshore Location Attractiveness Index.

Malaysia was also fifth in the list of emerging countries considered to be
the next wave of priority markets according to a report commissioned by UK Trade
& Investment entitled "Survive and Prosper: Emerging Markets in the Global
Recession".

In his address, Raja Dr Nazrin also announced that the University of Bahrain
(UoB) and Malaysia's International Centre for Education in Islamic Finance
(INCEIF) have agreed to offer the Chartered Islamic Finance Professional
programme at the UoB campus.

The programme is meant for professionals in the financial services industry
in Bahrain and neighbouring countries who are unable to come to the INCEIF
campus in Kuala Lumpur.

Raja Dr Nazrin said two scholarships will be also offered to eligible
Bahrainis to take the Chartered Islamic Finance Professional course at the
INCEIF campus in Kuala Lumpur for the January 2010 intake.

A special allocation of two research grants will be also awarded to Bahraini
researchers under the supervision of the International Shariah Research Academy
for Islamic Finance (ISRA), he said.

Later Thursday, Raja Dr Nazrin visited the UoB school of business,
accompanied by Malaysian Ambassador to Bahrain, Syed Sultan Idris, Deputy
Governor of Bank Negara Malaysia, Mohd Razif Abdul Kadir, Bernama Chairman Mohd
Annuar Zaini and INCEIF President Agil Natt.

Raja Dr Nazrin also witnessed the signing of a memorandum of agreement
between INCEIF and UoB as well as the launch of the Chartered Islamic Finance
Programme.

At the same event, Mohd Razif also gave a presentation of Malaysia's
journey in the development of Islamic finance.
-- BERNAMA