The full text of the speech by Dr.
"It gives me great pleasure to welcome you to this fourth
"The increasing international dimension of the global Sukuk market, in particular, affirms its offering as a distinct platform upon which international inter-linkages are fostered. The upcoming debut sovereign issuances from established financial centres and emerging markets and the increasing diversity of the composition of Sukuk investors across continents, in addition to the growing trend for multi-currency Sukuk issuances, cumulatively contribute towards strengthening the dynamism of the Sukuk as a global product for fund raising and investment activities in the international financial markets.
"In parallel with this rapid growth of cross-border financial flows has been the increased attention to the development of the international financial architecture relating to financial stability in the Islamic financial system. With the important two international institutions already well established, that is, the accounting standards setting organisation, AAOIFI, and the prudential standard setting body, the IFSB, concerted global efforts have been directed towards the progressive implementation of the recommendations in the eight building blocks identified in the Islamic Finance and Global Financial Stability Report 2010. In particular, the efforts have been focused on the adoption and operationalisation of the prudential standards and the development of the potential for effective liquidity management as part of the efforts to safeguard financial stability. It is encouraging that there has been a higher adoption of the prudential standards issued by the IFSB, with implementation by 13 regulatory and supervisory authorities worldwide with indications that there are more in the pipeline. Taking into account the distinct characteristics and specificities of Islamic finance, the effective implementation of these standards will contribute towards maintaining the soundness and stability of Islamic financial institutions.
"Liquidity management in the international Islamic financial system has also been strengthened with the establishment of the
Moving Forward: Transformative Changes to Grow Beyond Numbers
"The efforts taken to strengthen the global financial infrastructure of Islamic finance thus far have provided a solid foundation for the growth and internationalisation of the industry that is underpinned with soundness and stability. While the rapid growth of Islamic finance, attests to its resilience and competitiveness, the challenge before us is also to enhance its capacity to contribute towards inclusion and more balanced economic growth. Statistical numbers and projections are important performance indicators and benchmarks for the industry. However, the growth of the industry has to extend beyond the numbers to sustain its growth momentum. This is of particular importance in today's environment of growing global uncertainties and when considerations that prioritise the linkage of finance to the economy, justice and fairness, and sustainability and inclusion and which have been regarded as essential elements of a modern financial ecosystem. Islamic finance, with these inherent features and ethical dimensions, therefore has an immense potential role as a transformative agent in the economy, particularly in serving the requirements of the real economy and the broader society. Of importance is thus the role of the global Islamic financial marketplace in facilitating greater linkages with the real economy and inclusion and thus balanced growth.
"In evolving into the next growth phase, it remains an imperative for the Islamic banking industry in the global marketplace to reinforce meeting the very objective of its existence as an effective form of financial intermediation that serves the real economy and that complies with the requirements of the Shariah. As an extension to this, Islamic banks have the potential to extend its role to also include the role as an investment intermediary. This would require the diversification of banking business to expand beyond credit intermediation to investment intermediation, in which the alternative modes of risk sharing contracts can be applied. In performing investment intermediation, Islamic banking institutions not only strengthen further the linkage of finance and real economic activity, but also contribute towards more inclusive and more balanced growth.
"In the Malaysian Islamic finance marketplace, the changes associated with the modernisation of laws facilitate the maturing of the Islamic finance industry, with the enactment of the new Act in 2013. It includes new provisions that strengthen the potential role of Islamic financial institutions as investment intermediaries for risk-sharing to effectively take place. Legal recognition of investment accounts provides differentiation from deposits, which thereby opens up the avenue for Islamic financial institutions to further explore the various modes of operationalising such investment accounts.
"In advancing this quest, technological advances need to be leveraged upon to develop new innovative platforms that can facilitate the implementation of investment accounts. Aimed to assist Islamic financial institutions in performing this investment intermediary function more efficiently, a multi-bank platform is currently being developed in
"The potential for Islamic banks to progressively chart into this new territory would need to be supported by a state of readiness in terms of the capabilities of the industry to venture into a diversification into such business offerings. In preparing for a business landscape with different complexities, talent development in Islamic finance will need to be accorded with an even greater priority. Existing talent needs to be equipped with the necessary skills to support the expansion into areas of specialisation that include investment intermediation. Stronger knowledge in the value propositions of the investment instruments require a greater understanding on the risks associated with business ventures in the respective growth areas, including in the non-traditional markets. This would require determining the viability of such business and investment proposals. Additionally, at the management level, and the directors and Shariah scholars of Islamic financial institutions need to be adequately equipped with the necessary knowledge so as to have an understanding important for steering the business to the new directions of the industry.
"To realise the vision of a highly competent and high performing workforce in the Islamic financial sector, of equal importance is the standards of quality of the education programmes in Islamic finance and to raise the level of professionalism of Islamic finance practitioners.
"Technology can also be explored to remove barriers or impediments in promoting greater interconnectedness in Islamic finance as we aim to create stronger linkage with the real sector. As a catalyst to improve market access and enhance outreach, technology has the potential to disseminate information more efficiently, to promote greater market transparency and price discovery. Today, the launch of the digital application for Islamic finance is a further pioneering platform to facilitate sharing of information and for greater engagement, including between industry players that transcend borders. Such innovation is an impetus for raising greater awareness on benefits of Islamic finance as a form of financial intermediation.
Realising Cross-Border Business Opportunities for Greater Linkages
"The next frontier of Islamic finance beckons the global Islamic finance marketplace to evolve its business models to that which would strengthen the nexus of Islamic finance with the real economy. This is an important consideration in our strategies, in parallel with the efforts to further increase the internationalisation of Islamic finance that can cumulatively contribute towards strengthening economic linkages and thus enhance international economic connectivity.
"Themed "Marketplace for Global Linkages", with the presence of more than 1000 participants from various industries across the globe, this year's
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