Malaysian Prime Minister Datuk Seri Abdullah Ahmad Badawi has called upon those involved in the financial services sector to join government efforts in promoting a second wave of growth in Islamic finance, according to Malaysian News Agency Bernama. Immediate attention should be given to resolve differences in syariah interpretations in the application of Islamic finance, Abdullah, who is also Finance Minister, said in his speech at the International Centre for Education in Islamic Finance (INCEIF) Global Forum 2007 here Thursday. This, he said, would avoid rifts among industry players and address the quest for superior rates of returns overriding considerations of halal and haram. Suggesting the strengthening of existing centralised syariah panel with sound research infrastructure as a remedy to this problem, he said this would allow analysis of new Islamic financial instruments as well as products before they are made mainstream. "The long-term challenges is to establish a single syariah panel at the global level, which will serve to consolidate and resolve differences across jurisdictions," he said. "Secondly, Islamic financial institutions must ensure that they are able to withstand any threat relating to systemic or external shocks," said Abdullah. Pointing to difficulties in discovering incidents of fraud involving commercial entities, Abdullah said it was imperative for Islamic financial institutions to develop risk management systems that are adept and responsive to the sophistication of the modern financial market. "This system must be capable of detecting potential problems before they become financial disasters," he said. Abdullah also called for greater efforts to develop human capital for the Islamic financial industry such as through the establishment of professional research and training centres which can act as catalysts for Islamic finance development. "These centres will in turn be able to attract intellectuals specialising in Islamic finance, and help provide the necessary leadership. "In this regard, INCEIF should look to expand its reach in markets where demand for Islamic finance is growing," the Prime Minister said. He added that INCEIF could play a pivotal role in establishing professional standards for various programmes undertaken by the training centres. Turning to the fact that Islamic institutions continue to be overshadowed by their western counterparts due to the latter's longer tradition, Abdullah said the challenge for Islamic financial institutions was to become global in scale. "Greater scale will allow Islamic financial institutions to provide a broader range of services at rates that are more competitive. Moreover, greater scale will enable Islamic financial institutions to undertake and manage risks better," he said. Abdullah also said that greater economies of scale could be achieved not only through organic growth but also through consolidation or collaboration. Stressing on the importance of the zakat institution to purify Islamic financial institutions as profits grew, he said efforts were on the way to establish an international zakat centre.
