Country Economic Work for Malaysia - Islamic Development Bank

For example, International Centre for Education in Islamic Finance (INCEIF), Islamic
Banking Institute of Malaysia (IBFIM), and International Shariah Research Academy for
Islamic Finance (ISRA) were established for this purpose. In addition, various higher learning
institutions are also offering under-graduate and post-graduate programs in finance with
specialization in Islamic finance.
Government Strategy for the Islamic Finance
125. The Government of Malaysia (GoM) has been quite supportive of the Islamic
finance industry. Separate laws for Islamic banks and Takaful operators were promulgated in
as early as 1983 and 1984, respectively. Dedicated Shariah Advisory Councils, which act as
the highest authority to advise and determine Shariah resolutions, were formed at financial
regulatory bodies namely Bank Negara Malaysia, Securities Commission and Labuan
Financial Services Authority. The country’s judiciary has also strengthened with the
introduction of a dedicated High Court which is presided by Shariah conversant judge to deal
with Islamic finance cases. Since 2001, regulatory bodies in Malaysia (BNM, Securities
Commission and Labuan Financial Services Authority) have been actively providing capacity
building programs on Islamic banking regulation and supervision to other central banks. In
2006, Malaysia Islamic Finance Centre (MIFC) was launched with the aim to develop
Malaysia as the global hub for Islamic finance in the following four key areas: (i) Islamic
capital market – instruments and players for international business; (ii) banking and re-
Takaful; (iii) talent development; and (iv) professional service providers. In order to enable
comprehensive human development in the area of Islamic finance, the country has established
an endowment fund named “Fund for Shariah Scholars in Islamic Finance” worth $62.5
million.
Diversity of International and Domestic Financial Institutions
126. Malaysia has diverse and growing number of domestic and international
financial institutions. Malaysia's diversity of market intermediaries consists of commercial
and investment banks, local and foreign Islamic banks, international Islamic banks, Takaful
and re-Takaful operators, brokers and fund managers. These institutions include Islamic
subsidiaries and also entities undertaking international currency business (ICBU). Many of
Malaysian Islamic financial institutions have participated in Malaysia's several notable
achievements such as record-setting Sukuk issuances and various product innovations. With
Malaysian Islamic financial institutions extensive experience and pioneering many innovative
products, these institutions have gained mileage in terms of track record. By leveraging on
the inherent strengths of Malaysia's intermediaries, the issuers may able to benefit from cost
competitive issuances and facilitative process. The reputation of these intermediaries adds
further credibility to the issuance. This is also attributed to their rich experience in using
various Islamic principles or a combination of principles to produce innovative Islamic
banking, Takaful and Islamic Capital Market (ICM) offerings.
Facilitative Islamic Finance Environment in Malaysia
127. Malaysia provides a facilitative environment for Islamic finance industry, which
has enabled efficient delivery channels for the proliferation of foreign Islamic finance
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