\u300cTHE OFFICIAL OPENING OF THE INTERNATIONAL ISLAMIC CAPITAL MARKET CONFERENCE AND THE LAUNCHING OF THE INTERNATIONAL ISLAMIC CAPITAL MARKET WEEK AT THE SECURITIES COMMISSION\u300d\uff082002\u5e74\uff13\u670826\u65e5\uff09<\/p>\n
Thank you for inviting me to officiate at this
\nInternational Islamic Capital Market Conference and to
\nofficially launch the Islamic Capital Market Week, an
\nevent which is jointly organised by the Securities
\nCommission and the Asian Strategy and Leadership
\nInstitute. Let me also say a warm welcome to the many
\nforeign speakers and participants at this conference.
\nI hope you will find time to see and experience for
\nyourself the peace, stability and prosperity of
\nmultiracial Malaysia. By the time you leave Malaysia,
\nI hope that you will be convinced that the only things
\nthat we would like to launch from the Malaysian
\n`launching pad’ are new and more innovative financial
\nproducts to whet the increasing appetite of fellow
\nMuslims for more Syari’ah compliant financial
\ninstruments.<\/p>\n
2. The Malaysian economy is private sector-driven and
\nhas been so all along. The government sees itself as a
\nfacilitator, providing the necessary policies,
\nstructures and framework to ensure that the private
\nsector can continue to effectively play its role as the
\nmain engine of growth. This formula has worked well for
\nus, in good times and in bad times. This is because
\nboth the government and the private sector as
\nstakeholders in all economic enterprises have interests
\nthat are closely aligned.<\/p>\n
3. The nature and extent of the government’s role as
\nfacilitator of economic growth will change from time to
\ntime – difficult times call for a more proactive role
\nin the mobilisation of funds and stimulation of
\neconomic activities while good times allow us to create
\na healthy climate for investment and economic activity,
\nensure good housekeeping and collect our dividends.
\nThe Government considers itself as a substantial
\nshareholder in all businesses because 28 percent of the
\nprofit belongs to the Government.<\/p>\n
4. We therefore make no apologies for our business-
\nfriendly policy. The government is committed to
\nensuring that the market for capital, which is the fuel
\nthat drives the private sector engine of growth,
\ncontinues to be developed and strengthened so that it
\ncan continue to effectively mobilise funds to meet the
\nincreasingly huge financing needs of the private
\nsector.<\/p>\n
5. Let me make it clear that Malaysia is a Muslim
\ncountry, perhaps even a model Muslim country. Our
\neconomy has grown from strength to strength, from the
\nday of our independence almost forty-five years ago.
\nFrom being reliant on tin and rubber we have now a
\ndiversified economic base and we are the 18th largest
\ntrading nation in the world.<\/p>\n
6. Our financial and capital market has also grown in
\nparallel with the growth of the economy. The Malaysian
\ncapital market which took a beating in 1998 is today
\nback at relatively more reasonable and sustainable
\nlevels. With a 2.4 per cent gain over the year, the KL
\nComposite Index (KLCI) is a bright spot compared to a
\ndrop of six per cent for the Dow Jones, 23.5 per cent
\nfor the Nikkei and 24.3 per cent in the Hang Seng.
\nContrary to the expectation of many, GDP growth for
\n2001 remained in positive territory.<\/p>\n
7. Our Islamic capital market has grown from strength
\nto strength, complementing and benefiting from the
\ninfrastructure within the conventional capital market,
\nand providing a vital third component to Islamic
\nbanking and Takaful.<\/p>\n
8. In recent years, the Islamic capital market has
\ncontributed significantly to the broadening and
\ndeepening of the Islamic financial sector. Since almost
\na decade ago when the first Islamic Private Debt
\nSecurities were issued, the Islamic capital market has
\ndeveloped a wide range of equity products, debt
\nsecurities and managed funds.<\/p>\n
9. Supporting institutions and structures have also
\nbeen developed. We have a core of specialist Islamic
\nfinancial institutions as well as conventional
\nfinancial institutions that offer Islamic financial
\nproducts and services. The government, through the
\nSecurities Commission and Bank Negara Malaysia, ensures
\nby way of supervision and monitoring, that the
\nactivities carried out are not in conflict with the
\ntenets of the Syari’ah.<\/p>\n
10. We have successfully replicated our earlier
\nsuccesses with Islamic Banking and Takaful in the newer
\narea of Islamic capital market. Today, approximately
\nthree quarters of the stocks on the KLSE are Syari’ah
\ncompliant, with the KLSE Syari’ah Index or KLSI index
\nproviding a benchmark for the performance of the
\nSyari’ah-approved securities. There has also been a
\nsteady increase in the percentage of Islamic debt
\nsecurities relative to total debt securities in terms
\nof the value of funds raised. Many large domestic
\ncompanies are seeking financing through the issue of
\nlong-term Islamic papers. Islamic financing has also
\nstarted to provide money for the venture capital
\nindustry, turning innovative ideas into businesses.<\/p>\n
11. While Islamic unit trust currently forms only a
\nsmall portion of the entire unit trust industry, I am
\nconfident that this sector will grow in parallel with
\nthe growth of the entire unit trust industry. With the
\nincreasing prosperity of our people and the relative
\nsuccess of the government’s affirmative actions,
\ncoupled with savings averaging almost 33 per cent, we
\nexpect the unit trust industry, including the Islamic
\nunit trust industry to see rapid growth in the years
\nahead.<\/p>\n
12. Indeed we expect the Islamic capital market to
\nmobilise more domestic and institutional funds to
\nfinance our economic activities. After all there is a
\nlarge pool of Islamic funds being mobilised by the
\nIslamic banking sector, Takaful industry and various
\nMuslim savings schemes such as the Pilgrims Fund Board.
\nAll three have been growing rapidly for the past five
\nyears, and it is expected that given the size of the
\nassets and deposits held by these sectors, the
\npotential for strong growth of funds available for
\ninvestment in the Islamic capital market is tremendous.<\/p>\n
13. In the Islamic banking sector, deposits have grown
\nfrom RM4.9 billion in 1995 to RM35.9 billion in 1999.
\nI would like to add here that although the USD is worth
\n3.8 Ringgit, in purchasing power terms the Malaysian
\nRinggit in Malaysia is equal to one USD in America.
\nWhile total assets in the Islamic banking sector stood
\nat only 6.9 per cent of total banking assets in the
\nyear 2000, the Islamic banking sector is targeted to
\ncapture at least 20 per cent of the banking market
\nshare by year 2010.<\/p>\n
14. Takaful assets account for a relatively low
\npercentage of the total assets of insurance funds, but
\nthere is significant potential for increasing market
\npenetration, given that there is a low level of life
\ninsurance penetration, especially among the Muslim
\npopulation.<\/p>\n
15. In the offshore market we have established an
\nInternational Offshore Financial Centre to provide a
\nplatform for banking and fund raising activities
\ndenominated in foreign currencies. The Labuan Offshore
\nFinancial Services Authority (LOFSA) has identified
\nIslamic financial services and products as a niche
\narea.<\/p>\n
16. We have learnt many lessons from the Asian
\ncurrency crisis. We learnt about the greed of currency
\ntraders; we learnt about the fickleness of portfolio
\nflows; we learnt about the “credibility and
\nprofessionalism” of the so-called analysts and economic
\nexperts – cheering an economy one day and blowing it to
\nsmithereens the next day, basing their comments usually
\non tendentious media reports, having almost never
\nvisited or studied in depth the situation on the
\nground.<\/p>\n
17. Most importantly, we learnt about the pains that
\nunfettered globalisation and unchecked liberalisation
\ncan inflict on developing economies. We learnt about
\nthe importance of equipping ourselves, our
\ninstitutions, our enterprises and indeed our economy
\nwith the knowledge and the skills and the intrinsic
\nstrengths to cope with the tidal wave of globalisation.
\nWe learnt that for developing economies, political
\nsovereignty without economic sovereignty cannot ensure
\ntrue independence for our nation. The people who
\nconceived globalisation did not do it for charity.
\nThey had and they still have their own acquisitive
\ninterest at heart. This fact we have always borne in
\nmind.<\/p>\n
18. In this regard we in Malaysia are determined to
\nensure that we put the lessons that we have learnt
\nespecially from the currency manipulations to good use.<\/p>\n
19. On the international front, Malaysia together with
\nother developing economies must continue to demand a
\nmore equitable distribution of the fruits of
\nglobalisation and a check on economic bullying
\npractices which are carried out in the name of
\nglobalisation, free markets and portfolio flows. The
\npressure tactics, the `green room’ approach, used at
\nWTO meetings must cease.<\/p>\n
20. On the domestic front, we have resolved to
\nstrengthen ourselves, our institutions, our markets,
\nour intermediaries and our investors so that we are
\nbetter prepared to face the ups and downs of the
\neconomic cycle.<\/p>\n
21. As we pursue all these measures, it is imperative
\nthat we ensure efficient and sufficient mobilisation of
\nfunds at home and abroad to support these increasingly
\ncapital intensive economic activities. It is vital
\nthat the capital market efficiently allocate available
\nfunds to further generate growth and to ensure that we
\nare not overly reliant on foreign capital even as we
\nwelcome long-term foreign capital with open arms. FDI
\nis not always about bringing in capital. More often
\nthe capital is borrowed locally and used to pay for
\nimported machinery etc., resulting in an outflow of
\ncapital rather than inflow. If local borrowing is not
\nallowed then the investments may not be made. This
\ntalk about inflow of funds due to FDI need to be
\nclarified. We must therefore ensure that our capital
\nmarket, indeed our entire financial system, are made
\nmore resilient and the supporting framework more
\nrobust, so that we can better absorb future shocks
\narising from a yet to be regulated international
\nfinancial market. It is for this reason that just over
\na year ago the government endorsed the Capital Market
\nMasterplan and the Financial Sector Masterplan
\ninitiated and prepared by the Securities Commission and
\nBank Negara Malaysia respectively.<\/p>\n
22. The Capital Market Masterplan is a comprehensive
\n10-year plan which charts the strategic positioning and
\nfuture direction of the Malaysian capital market for
\nthe next 10 years. It seeks to ensure that the private
\nsector as the engine of economic growth will continue
\nto be able to have all their financing needs met – with
\nmarket institutions that are strong, resilient and
\ncompetitive; with intermediaries having high standards
\nof professionalism and technical skills; a regulatory
\nframework that is strong yet facilitative and, most
\nimportantly, a sufficient array of products to meet
\nrisk-reward profiles of issuers and the increasingly
\nsophisticated and deep-pocketed investors.<\/p>\n
23. With respect to the Islamic capital market, the
\nCapital Market Masterplan has identified as a key
\nobjective the establishment of a Malaysian
\ninternational Islamic capital market centre. In the
\npursuit of these objectives, four key strategies have
\nbeen identified, namely: to facilitate the development
\nof a wide range of competitive products and related
\nservices; to create a viable market for the effective
\nmobilisation of Islamic funds; to ensure appropriate
\nand comprehensive accounting, tax and regulatory
\nframework; to enhance the value recognition of the
\nMalaysian Islamic capital market internationally.<\/p>\n
24. In the early stages of the Islamic financial
\nmarket development, products offered in the
\nconventional financial market were evaluated, assessed
\nand where appropriate adapted to ensure conformance
\nwith the Syari’ah.<\/p>\n
25. While the approach of imitation and adaptation has
\nserved us well in getting the Islamic capital market
\nstarted and in enabling it to leapfrog into the wider
\nfinancial system, it is clear that this approach alone
\nis not sufficient for us to efficiently mobilise Muslim
\nfunds and provide a sufficient array of instruments for
\ninvestors and issuers looking for Syari’ah compliant
\ninstruments. Neither does such an approach do justice
\nto the completeness of Islam as a way of life and the
\nrichness of `fiqh-muamalat’.<\/p>\n
26. Going forward, for the Islamic capital markets to
\nremain competitive, attractive and innovative, we must
\nbe able to introduce indigenous Islamic financial
\nproducts, products that meet the risk-reward profiles
\nof investors and issuers, fulfil all the tenets of the
\nSyari’ah while remaining sufficiently cost-effective
\nand competitive vis-\u2026-vis conventional products. If we
\nare merely to confine our product development efforts
\nto evaluation and adaptation of products in
\nconventional markets, the Islamic capital market will
\nhave to play a perpetual catch-up game with the
\nconventional financial system. We will also have to
\ncontinuously rely on the expertise within the
\nconventional market to take the Islamic capital market
\nforward. Failure to fulfil the demand for Syari’ah
\ncompliant instruments, may well result in Muslims
\nreturning to or relying totally on conventional
\nproducts with the elements of `riba’ and `gharar’.
\nIndeed, we should see the development of a sufficient
\narray of Islamic financial products as `fardhu
\nkifayah’, since we have the intellect, strength and
\nskills to use for the benefit of the Muslim community.<\/p>\n
27. In Malaysia, efforts to diversify Islamic
\nfinancial products have been quite successful. This is
\nno doubt the result of the relentless efforts of
\nIslamic scholars, practitioners and academics and
\nsupported and facilitated by the government and
\nregulators such as SC, KLSE, BNM and LOFSA. I am
\nparticularly pleased with the active and continuous
\ninvolvement of Syari’ah scholars (ulama) to ensure
\ncompliance with Syari’ah principles and standards.
\nParticipation of and contribution from Syari’ah
\nscholars is indeed critical for the continued success
\nand further development of the Islamic capital market.<\/p>\n
28. Of course there are bound to be differences in
\nviews and opinion among scholars with respect to the
\ninterpretation of the Syari’ah. This however should not
\nbe a cause for paralysis and an excuse for inaction.
\nRather it should be regarded as both a challenge and an
\nopportunity – a challenge because differences in views
\nwill call for deeper analysis and evaluation, and an
\nopportunity because it allows for the vigorous exercise
\nof `ijtihad’ among the scholars and the flexibility to
\ntest new grounds.<\/p>\n
29. To progress further, we need to look at the
\npossibility of moving towards some convergences of
\nSyari’ah interpretations. We need to give careful
\nthought to the interpretations of the teachings of
\nIslam and how they relate to today’s and future
\nfinancial matters, while meeting the `maslahah’ (public
\ninterest) and `umum balwa’ (common plight) of the
\nummah.<\/p>\n
30. Towards this effort, the Quran and the Sunnah will
\nof course be our ultimate guide supported by the
\napplication of `qiyas’ and `ijma`’ taking through the
\nprocess of `Ijtihad’. Islam is the most complete of
\nreligions because it governs all aspects of life at all
\ntimes. In terms of trade and financial matters, there
\nis a lot of guidance provided in the Quran and the
\nHadith. Trying to recreate the conditions prevailing
\nduring the lifetime of the Prophet amounts to admission
\nthat Islam is only relevant to the society of that
\nperiod. This amounts to degrading Islam as a religion
\nonly suitable for the first century of the Hijrah or
\nthe 7th century Masehi. Those who want us to return to
\nthat period are really insulting the eternity and
\nuniversality of Islam.<\/p>\n
31. Whether we like it or not rapid advances in ICT
\nwill have a tremendous impact on all aspects of our
\nlife – the way we live, the way we communicate, the way
\nwe do business and indeed the way the entire market
\noperates. If we do not want to be left behind in the
\nrace into the information age, we cannot isolate or
\ninsulate ourselves from the information revolution and
\nthe technology which is driving it. We must move with
\nthe tide into the information age without being drowned
\nin the process. Never again must we allow ourselves to
\nmiss the opportunities and need for keeping pace with
\nthe advanced countries as we did with the industrial
\nrevolution.<\/p>\n
32. Islam is not and has never been synonymous with
\nconservatism. Islam does not call for rejection of
\ntechnology or modernity. While the Islamic capital
\nmarket is all about complying with Syariah principles,
\nwe must take advantage of progress in ICT for
\nefficiency, effectiveness and competitiveness of our
\nproducts and markets.<\/p>\n
33. In the new globalised economy, ICT has the
\npotential to raise productivity, stimulate innovation
\nin economic organisation and entrepreneurship, and
\ncreate and disseminate knowledge and wealth. The
\nIslamic capital market will pay a heavy price if the
\nprofessionals and the policy makers involved do not use
\nICT for our benefit.<\/p>\n
34. In the capital market in particular, we need to
\nbroaden on-line trading activities to keep up with the
\nnew economy and increase the distribution channels and
\ntransaction volumes. In this regard, I am pleased to
\nnote that there have been efforts to establish Islamic
\nfinancial portals providing a wide spectrum of on-line
\nservice, including by several Malaysian-based
\ncompanies.<\/p>\n
35. For economic prosperity to be widely shared, it
\nmust be founded upon progress in the areas of research
\nand innovation and human and institutional capacity
\nbuilding. There is need therefore, to develop clear and
\ncomprehensive strategies that will foster innovation
\nand entrepreneurship, promote a broad distribution of
\nthe opportunities of the new economy, facilitate the
\ndiffusion of information and communication technology
\nand programmes that will promote life-long learning,
\neducation and training of our human capital. Across
\ndeveloping countries today, a majority of Islamic
\ncountries included, there remains a dearth of
\ntechnical, professional and managerial talents and
\nskills, so essential and critical in delivering
\ndevelopment.<\/p>\n
36. Thus human capacity building must be accorded high
\npriority in the development efforts of all Muslim
\ncountries. It must be integrated with the overall
\neconomic, social and human resources development
\nstrategies, while adhering closely to the true and
\nfundamental teachings of Islam.<\/p>\n
37. At this stage I would like to say a few words
\nabout the Gold Dinar. The proposal is to make this
\nDinar a currency for international trade only. It is
\nnot meant to replace the currency of any country.<\/p>\n
38. International trade requires the determination of
\nthe exchange rates of the currencies of the trading
\ncountries. With paper currency there is no intrinsic
\nvalue. The exchange rate is therefore arbitrary and
\nsubject to manipulation as we saw during the Asian
\nfinancial crisis.<\/p>\n
39. Gold has a definite value based on the demand for
\nthe metal. Its value may appreciate or depreciate
\naccording to world’s demand and the demand in a given
\ncountry. But the fluctuation would be minimal. The
\nGold Dinar being made of gold will largely follow the
\nprice of gold.<\/p>\n
40. The local gold price will determine the exchange
\nrate for the local currency against the Dinar. Thus
\nthe price of imported goods in Dinar can be computed in
\nlocal currency and vice versa for local goods to be
\nexported.<\/p>\n
41. The Dinar can be held as central bank reserve.
\nTrade need not be paid in actual Dinar but the imports
\nand exports of a pair of trading nations can be
\nbalanced and only the difference paid in Dinar. This
\nwill minimise the need to move the Gold Dinar. In fact
\nthe surplus or deficit can be credited or debited
\nagainst future imports or exports.<\/p>\n
42. We have already worked out the mechanics for using
\nthe Gold Dinar and any problem arising can be resolved.
\nThe risk of speculation will be reduced to almost
\nnothing. World trade can actually expand because the
\ncost of business will be much reduced as the need to
\nhedge would practically disappear.<\/p>\n
43. I hope the delegates will give some time to think
\nabout this idea of a Gold Dinar.<\/p>\n
44. The Muslim population of the world currently
\nstands at 1.3 billion, representing a very significant
\nportion of the world’s population. Although there is
\nmuch more that Muslim nations can do for the socio-
\neconomic upliftment of the `ummah’, I am certain that
\nwe have among us an abundance of talent and expertise
\nin all fields including conventional and Islamic
\nfinance, conventional and Islamic economics, Islamic
\nfinancial systems, structuring of capital market
\nproducts, `fiqh-muamalat’ and the like. Together let
\nus use the resources and expertise available and help
\nenhance capacity in the areas of Islamic finance,
\neconomics and capital market. Let us replicate in the
\nareas of Islamic finance and capital market, the
\nearlier successes of Muslim scholars in areas like
\nmathematics, astronomy, and medicine that contributed
\nto the transformation of Islam as a world civilisation.<\/p>\n
45. Greater and improved cooperation is also needed in
\nour efforts to build a sustainable pool of human
\ncapital among and within the Islamic nations. In this
\nregard, Islamic countries should leverage on the
\norganisations that are already available to us such as
\nthose within IDB and OIC. By enhancing partnerships
\nvia the existing institutions, member states can be
\nprevailed upon to provide all kinds of training and
\neducation to bridge the knowledge and skills divide
\namong our peoples and communities. Through the OIC,
\nmuch progress in the area of institutional and human
\ncapacity building has been made, but more can and needs
\nto be done. In particular, Muslim academics, prominent
\nbusiness leaders and technical experts should be
\ninvited to expand our knowledge and research in the
\nareas of Islamic economics and development, banking and
\nfinance.<\/p>\n
46. While the thrust of company and securities
\nregulation has always been about accountability, trust,
\ntransparency, avoidance of conflict, board
\nresponsibility and shareholder rights, the term
\n`corporate governance’ seems to have become fashionable
\nsince the Asian currency crisis. Time and time again
\nwe in this part of the world have been lectured about
\nhow good corporate governance is lacking and that is
\nthe sole cause of all our ills and ailments.<\/p>\n
47. Indeed the elements of good governance are
\ninherent values in Islam. If we are guided in our
\nbusiness transactions by the Islamic injunctions of
\nprofessionalism, high ethical conduct and the concept
\nof trust or `amanah’ that is so fundamental in Islam,
\ngood governance will be an inevitable by- product.<\/p>\n
48. Surah Al-Baqarah (verses 282 and 283) for instance
\nhighlight the importance of transparency by providing
\nstep by step process that should be followed when
\ncarrying out a transaction, highlighting the importance
\nof record-keeping so as to avoid injustice to the
\nparties involved and emphasising the need for
\naccountability and transparency.<\/p>\n
49. Furthermore the concept of trust (amanah) is
\npervasive in Islam. In Surah Al-Anfal (verse 27) we
\nare enjoined to “betray not the trust of God and the
\nApostle, nor misappropriate knowingly things entrusted
\nto you”. The prophet (Peace be unto him) was reported
\nin one of the `Hadith’ as saying that each of us is a
\nguardian and each guardian is accountable to everything
\nunder our care.<\/p>\n
50. In Surah An Nisa (verse 58) Allah commands us to
\nrender back the trust to those whom they are due.<\/p>\n
51. Let us therefore not see good governance as
\nsomething alien to us or externally imposed upon us.
\nIn Islam the elements of good governance – trust,
\naccountability, ethical conduct – are indeed our way of
\nlife not something that became fashionable only
\nrecently. If we ensure that we are always guided by
\nthese principles in all our dealings, good governance
\nwill be second nature to us all.<\/p>\n
52. I am sure your deliberations at this conference
\nand your active participation towards developing the
\nIslamic capital market will ensure the continuing,
\nindeed increasing, relevance and vitality of the
\nSyari’ah in today’s world. I wish you every success in
\nyour deliberation and endeavours.<\/p>\n
53. On this note, I have great pleasure to declare
\nopen the Kuala Lumpur International Islamic Capital
\nMarket Conference and to officially launch the Islamic
\nCapital Market Week.<\/p>\n","protected":false},"excerpt":{"rendered":"
\u300cTHE OFFICIAL OPENING OF THE INTERNATIONAL ISLAMIC CAPITAL MARKET CONFERENCE AND THE LAUNCHING OF THE INTERNAT … \u7d9a\u304d\u3092\u8aad\u3080 \u30c7\u30a3\u30ca\u30fc\u30eb\u306b\u95a2\u3059\u308b\u30de\u30cf\u30c6\u30a3\u30fc\u30eb\u9996\u76f8\u306e\u6f14\u8aac\u2461<\/span>