KUALA LUMPUR: New initiatives and strategies must be put in place by the Malaysian government and regulators if the country wants to remain the investors choice for the banking business, says a senior economist.
Chairman of the Russian Centre For Islamic Economic and Finance (RCIEF) International Advisory Panel Professor Datuk Dr Sudin Haron said despite Malaysia’s supremacy as the leading Islamic financial centre, other countries in the Asia were also capable of providing Islamic financial services and ultimately becoming the leading Islamic financial centre.
“Hong Kong for example, is trying to become a leader in capital market.
Hong Kong’s financial regulators believe China’s booming economy will attract investors and fund managers to place their money in China, thus Hong Kong is the better place and choice for them.
“Singapore, on the other hand, is trying to establish itself as the Islamic financial centre for the wealthiest.
Therefore, they are now trying to focus themselves in the area of Islamic wealth management,” he told Bernama in an interview.
However, he said any new policy and incentives introduced by the government can be emulated by other countries.
In most cases, these countries would introduce more attractive incentives compared with incentives introduced earlier by the Malaysian government.
“Besides providing incentives to players in the Islamic financial system, the government must also be susceptible to the needs of those who use the products and services of the Islamic financial system.
“Therefore, a good market intelligence system should be introduced as this would provide a true picture of the market, hence, appropriate strategies and action must be implemented,” he proposed.
Sudin, a scholar with vast experience in the field of banking and finance, management and business management is also the President of the Kuala Lumpur Business School and executive chairman of Vision Bridge Sdn Bhd.
Currently, products and services of the Islamic financial system are used by domestic customers, as such, efforts should be made to lure international customers to use Malaysian Islamic banks.
He said Islamic local banks could only be attractive to the foreign customers if the level of service was at par if not better than those offered by international Islamic banks.
Saying that local banks should focus on productivity and efficiency, he added that another important element that needed to be carefully structured is the transaction cost related to the products and services of Islamic banks.
“The regulator must ensure the cost incurred by players and the users of Islamic banking products are much cheaper than the transaction cost of conventional banks,” he pointed.
Beside Malaysia, Sudin said there were many other countries and cities which want to be known as the leading Islamic financial centre.
“New York, London, Dubai, Manama, Doha are already in the race, whereas, Moscow, Frankfurt, Paris, Hong Kong, Singapore and Bandar Sri Bengawan are starting to equip themselves with the infrastructure prior to entering this new alternative financial structure,” he disclosed.