Malaysia to host Islamic finance forum

Central bank governors from Islamic countries will attend Malaysia’s first international Islamic finance forum in Kuala Lumpur later this week.

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

Malaysia’s Central Bank Negara, the event organizer, said it aims to highlight business opportunities as the country ramps up efforts to draw in foreign money with Muslim and Middle Eastern funds targeted in particular, AFP reported.

“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 in a modern banking system. This means funds are banned from being invested in companies associated with tobacco, alcohol or gambling, considered taboo by Muslims.

Malaysia has been promoting itself as a center for Islamic finance but faces rivalry from neighbors Singapore and Brunei.

As a predominantly Muslim nation, Malaysia has 10 fully-fledged Islamic banks, after establishing its first in 1983, while a series of conventional banks also offer Islamic financial services.

Malaysia also opened up the industry to foreign investors. Licenses 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.

Meor Amri Meor Ayob, who rates Islamic financial instruments at Rating Agency Malaysia, said the conference will promote Malaysia to foreign bankers amid regional competition. “This will showcase Malaysia as a country with the capability, capacity and human resources to provide Islamic financial services,” he said.

Bank Negara has said the forum will also tackle contemporary issues relating to Islamic finance including regulatory standards which analysts say are crucial for development of the sector in Malaysia.

Senior economist at Malaysia’s Bank Islam, Azrul Azwar, said a major topic likely to be discussed would be differences between the interpretation of compliance with sharia law, which bans the earning of interest.

Countries in the Middle East have a more strict interpretation of sharia rules, compared to Southeast Asian nations.

Governors expected to attend include those from Bangladesh, Egypt, Iran, Pakistan, Qatar, Saudi Arabia, Singapore and the United Arab Emirates.