Zahid: Islamic banking assets now at 27 PCT of Malaysia total banking system

He said Islamic finance also provides financing to all segments of society irrespective of beliefs, race and gender.

"From less than four Islamic banks and takaful players before the year 2000, there are now 27 players that offer over 100 financial products beyond the basic financial offerings," he said at the official opening of the 13th Kuala Lumpur Islamic Finance Forum here today.

His speech was read by former Deputy Governor and Director of Bank Negara Malaysia Datuk Zamani Abdul Ghani.

Ahmad Zahid said over three decades, Islamic finance has grown and developed and contributed significantly to the development of the real economy.

He said the size of the Malaysia Islamic Capital Market (ICM) has reached RM1.7 trillion, or 60 per cent of the total value of the capital market as at the end of 2015, making Malaysia the world leader in ICM products.

However, he said, Islamic finance should not be complacent and strive to be the best financial system in order to attract the public, Muslims and non-Muslims alike.

"Islamic finance must be robust and resilient, and should continuously reposition itself if it desires the respect and recognition from the rest of the world," he said.

Ahmad Zahid said globally, the Islamic finance industry is still too small compared to the size of its potential market which comprises over one billion Muslims worldwide.

He said one of the impediments to the growth of Islamic finance is the lack of awareness among the public on Islamic alternative modes of banking, insurance and investment.

"The industry must continuously engage and educate the general public to address this issue," he said.

He said further research and study should also be carried out on Islamic finance at all levels involving regulators, practitioners as well as academics.

Apart from that, he said investment in human capital must be further improved as the lack of knowledge in Islamic finance is strongly related to the shortage of qualified experts.

"This has affected the innovation of new products and services in the country. There is also an urgent need to create greater awareness on Islamic finance among market participants through research, education and training," he said.

Ahmad Zahid said the legal and regulatory framework should also be resilient and facilitative.

He said dispute resolution mechanisms should be more accommodative to the application of Islamic legal rules and methods, to avoid embarrassment to Islamic banking cases as a result of incoherent and anomalous legal judgements.

"Other issues related to regulations and supervision should also be equally and adequately addressed so as to bring our Islamic banks and financial institutions at par with international standards.