http://biz.thestar.com.my/news/story.asp?file=/2007/10/20/business/19224402&sec=business

Islamic finance the ‘New Silk Road’

WASHINGTON: Islamic finance has the potential to become the “New Silk Road” that will enhance economic and financial linkages not only between Asia and the Middle East but also the rest of the world, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said here on Thursday. 

Islamic finance can contribute towards the efficient mobilisation and allocation of funds across regions whereby “regions with surplus savings may channel funds to regions with deficit savings” to bring about global financial integration, she said. 

She cited the remarkable growth of the sukuk or Islamic bond market with an average annual growth rate of 40% to meet massive funding requirements for infrastructure projects in emerging market economies. 

Following the Malaysian government’s issuance of the world’s first global sovereign sukuk in 2002, several countries have followed suit. She noted that the sukuk market had doubled in size to US$28bil from a year ago, and 80% of the sukuks issued were subscribed by conventional international investors. 

Tan Sri Dr Zeti Akhtar Aziz

“There has also been significant demand for sukuk spurred by high levels of surplus savings in Asia and the Middle East” and the growing search for higher returns and greater diversification of risks in the international financial system, she said. 

Zeti was the keynote speaker at the Islamic Finance in South-East Asia: Local Practice, Global Impact conference at Georgetown University, organised by the National Bureau of Asian Research. She is also here to attend the annual World Bank and International Monetary Fund meetings. 

She said Islamic finance had recorded dramatic growth with a presence in more than 75 Muslim and non-Muslim countries five years after the creation of the Islamic Financial Services Board, which formulates the international regulatory and prudential standards for Islamic finance. 

Zeti added that more than 300 Islamic banking institutions and international financial centres, including in London, Singapore and Hong Kong, were offering Islamic financial products and services, with total Islamic financial assets estimated at more than US$1tril, a five-fold increase over the past five years. 

According to her, three key elements are important to maintain the momentum for growth in the sector – a need for increased investment in research and development; training activities to meet the current shortage in the talent pool; and greater use of technology in Islamic finance. – Bernama 

 

Leave a Reply

Looking for something?

Use the form below to search the site:


Still not finding what you're looking for? Drop a comment on a post or contact us so we can take care of it!