Malaysia chasing funds as Islamic bankers meet

Central bank governors from Iran to Saudi Arabia are to attend Malaysia’s first international Islamic finance forum this week as the nation works to cement its future as an Islamic financial hub.

The four-day Global Islamic Finance Forum starting Monday is expected to attract about 800 regulatory authorities and industry players.

Malaysia’s central Bank Negara, the event organiser, said it aims to highlight business opportunities as the nation ramps up efforts to draw foreign money — Muslim and Middle Eastern funds in particular.

“The forum will provide an avenue for global investors, issuers and financial industry players to discuss investment and business opportunities in Asia,” Bank Negara said in a statement.

Islamic finance fuses principles of sharia or Islamic law and modern banking. Funds are banned from investing in companies associated with tobacco, alcohol or gambling considered taboo by Muslims.

Malaysia has been promoting itself as a centre for Islamic finance but faces rivalry from neighbours Singapore and Brunei. The mainly Muslim nation has 10 fully-fledged Islamic banks, after establishing its first in 1983, while a series of conventional banks also offer Islamic financial services.

Malaysia fast-tracked the liberalisation of its Islamic banking sector three years ahead of schedule in 2004, encouraging domestic financial institutions to set up Islamic banking units.

It also opened up the industry to foreign players. Licences have been awarded to Kuwait Finance House, Saudi Arabia’s Al Rajhi Bank, and the Asian Finance Bank, owned by a consortium led by Qatar Islamic Bank.