MSIA NEEDS NEW STRATEGIES TO REMAIN ASIA`S ISLAMIC FINANCE CENTRE

By Tengku Noor Shamsiah Tengku Abdullah

KUALA LUMPUR, Dec 30 (Bernama) -- New initiatives and strategies must be put
in place by the Malaysian government and regulators if the country wants to
remain the investors choice for the banking business, says a senior economist.

Chairman of the Russian Centre For Islamic Economic and Finance (RCIEF)
International Advisory Panel Professor Dr Sudin Haron said despite
Malaysia's supremacy as the leading Islamic financial centre, other countries in
the Asia were also capable of providing Islamic financial services and
ultimately becoming the leading Islamic financial centre.

" Hong Kong for example, is trying to become a leader in capital market.
Hong Kong's financial regulators believe China's booming economy will attract
investors and fund managers to place their money in China, thus Hong Hong is the
better place and choice for them.

" Singapore, on the other hand, is trying to establish itself as the Islamic
financial centre for the wealthiest. Therefore, they are now trying to focus
themselves in the area of Islamic wealth management," he told Bernama in an
interview.

However, he said any new policy and incentives introduced by the government
can be emulated by other countries.

In most cases, these countries would introduce more attractive incentives
compared with incentives introduced earlier by the Malaysian government.

" Besides providing incentives to players in the Islamic financial system,
the government must also be susceptible to the needs of those who use the
products and services of the Islamic financial system.

" Therefore, a good market intelligence system should be introduced as this
would provide a true picture of the market, hence, appropriate strategies and
action must be implemented," he proposed.

Sudin, a scholar with vast experience in the field of banking and finance,
management and business management is also the President of the Kuala Lumpur
Business School and Executive Chairman of Vision Bridge Sdn Bhd.

Currently, products and services of the Islamic financial system are used
by domestic customers, as such, efforts should be made to lure international
customers to use Malaysian Islamic banks.

He said Islamic local banks could only be attractive to the foreign
customers if the level of service was at par if not better than those offered by
international Islamic banks.

Saying that local banks should focus on productivity and efficiency, he
added that another important element that needed to be carefully structured is
the transaction cost related to the products and services of Islamic banks.

" The regulator must ensure the cost incurred by players and the users of
Islamic banking products are much cheaper than the transaction cost of
conventional banks," he pointed.

Beside Malaysia, Sudin said there were many other countries and cities which
want to be known as the leading Islamic financial centre.

" New York, London, Dubai, Manama, Doha are already in the race, whereas,
Moscow, Frankfurt, Paris, Hongkong, Singapore and Bandar Sri Bengawan are
starting to equip themselves with the infrastructure prior to entering this new
alternative financial structure," he disclosed.

He explained the Islamic financial industry was no longer a privilege to a
certain group of people or to a specific country.

" The Islamic financial system is seen as a viable alternative to the
conventional system. Therefore more countries will try and introduce this
into their financial system.

" Any country which wishes to become the industry leader must offer better
products and services to meet users demand," he said.

Sudin said Malaysia is seen by many as a leader in propagating the Islamic
financial system and there were several reasons why Malaysia managed to position
itself as the front runner.

The government's commitment in implementing the Islamic financial system as
an alternative to the conventional system was the main reason why Malaysia
emerged as the leader in this area.

Secondly, Sudin said the regulator of the financial system was able to
formulate well coordinated short and long term plans for the development of
an Islamic financial system in Malaysia.

He said the Financial Sector Master Plan, introduced by the Central
Bank, laid out strategies toward strengthening the Malaysian financial system in
line with the globalisation and liberalisation of the world financial system.

Islamic financial institutions are efficiently managed and they are seen by
customers as better banks than their conventional counterparts judging from the
stream of non-Muslims customers who have begun to patronise these banks.

Sudin served Central Bank of Malaysia between 2005 and 2006 as an expert in
the Islamic Banking and Takaful Division.

In 2006, he was appointed the Deputy Chief Executive for his brainchild
project, the International Centre for Education in Islamic Finance.

Before joining the central bank, he served with Universiti Utara Malaysia as
an academician and administrator and was also involved in the banking sector.

-- BERNAMA