Chance for Islamic Finance to lead: PM

Published: Wednesday November 12, 2008 MYT 1:25:00 PM
Updated: Wednesday November 12, 2008 MYT 3:35:03 PM
Chance for Islamic Finance to lead: PM
By NG CHENG YEE


KUALA LUMPUR: There are tremendous opportunities for Islamic Finance to lead the financial fraternity into a new growth era, said Prime Minister Datuk Seri Abdullah Ahmad Badawi.

He said Islamic Finance needs to quickly integrate itself with the international financial system and prove itself as a viable alternative to the conventional financial system practised in most parts of the world.

“Many observers are increasingly considering the Islamic Financial system with renewed respect and admiration.

“As such, Islamic Finance must be prepared to take on a new dimension to meet the changing demands of business in an increasingly globalised environment,” he said Wednesday at the launch of Standard Chartered Saadiq Berhad here.

Abdullah said Malaysia is well poised to lead any attempt to reform the global financial system by infusing concepts and themes borrowed from Islamic Finance.

He said the recent global financial meltdown illustrated the desperate need for a system based on the principle of profit-sharing, where both parties in the contract are subjected to potential losses and returns.

“It is a system that is both fair and equitable as both parties are presented with a win-win situation such that losses would not burden only one party,” he said.

He said by transforming into an essential element of global finance, Islamic Finance would surely end its perceived position as a niche or boutique financial service.

However, he said, for Islamic Finance to be an effective complement to global finance, it is imperative to have a sound legal framework, which would provide the sector with the credibility it requires.