Malaysia Prime Minister Abdullah Ahmad Badawi said as the conventional financing system continued to collapse, having a serious impact on the global economy, it was high time for the Muslim world to turn the "adversity into an opportunity".
"The world is beginning to appreciate the need for alternative arrangements to the current international financial system. At the same time, Islamic finance is gaining credibility as an alternative," he said.
Badawi said he believed Islamic finance had a bright future but that banking and finance standards needing harmonizing and Islamic financial products really required greater innovation. "As long as our markets remain divided by different jurisdictions and interpretations of shariah standards, Islamic finance is unlikely ever to grow beyond the shore of Muslim countries.
"It is therefore imperative for decision-makers to work hard to set up a harmonised standard which can be accepted and adhered to by the Islamic banking community as a whole," he said.
Abdullah, who is also the patron of the WIEF, said there were some encouraging signs, citing as an example, the world beginning to appreciate the need for an alternative arrangement to the current international financial system.
He said there were discussions on the need for regulations and prudence in the management of the financial system and at the same time, Islamic finance was gaining credibility as an alternative system.
"Islamic finance is fundamentally based on the principle of 'no risk, no reward'. Only those who decide to take risks will benefit," he said, adding that there was a huge departure from conventional finance where considerable gains could still be made on zero-risk.
Abdullah said such a system has opened the doors to irresponsible lending where greed has been allowed to take control, citing the sub-prime mortgage crisis as the classic case.
He said the second challenge was for Muslim countries to be continuously innovative and come up with new Islamic finance products.
"To be competitive, they need to develop products which can set themselves apart from their conventional counterparts. We need to explore ways to create attractive financial packages. Indeed this is a daunting task but I am confident that, with collective effort and dedication, this will not be beyond our means to do so," he said.
Abdullah urged Muslim countries to attract more young and bright practitioners to join the Islamic finance industry as they were crucial for developing the intellectual capacity to meet the above challenges.
"To enlarge the pool of intellectuals, Muslim countries must encourage more students to embark on professional studies in Islamic finance and more academies such as the International Centre for Education in Islamic Finance in Kuala Lumpur should be set up in Muslim countries.
"The Islamic Development Bank can also play a pivotal role here," he said.
On the global financial crisis, he said, it was obvious the conventional financial system has collapsed with serious implications on the global economy, causing numerous countries to struggle to overcome recession.
"Massive funds are being pumped in to revitalise their respective economies. We have inherited a system where people can trade what they do not own and the resulting inflationary pressures on the global market have caused immense damage to the economic well-being of the world's poor," he said.
He said such was the impact of unbridled greed in a financial system with no accountability on money lending.
"The question before us now is -- How do we turn this huge adversity into an opportunity for the Muslim world?" he asked some 1,000 participants at the forum, which ended today.
"The world is beginning to appreciate the need for alternative arrangements to the current international financial system. At the same time, Islamic finance is gaining credibility as an alternative," he said.
Badawi said he believed Islamic finance had a bright future but that banking and finance standards needing harmonizing and Islamic financial products really required greater innovation. "As long as our markets remain divided by different jurisdictions and interpretations of shariah standards, Islamic finance is unlikely ever to grow beyond the shore of Muslim countries.
"It is therefore imperative for decision-makers to work hard to set up a harmonised standard which can be accepted and adhered to by the Islamic banking community as a whole," he said.
Abdullah, who is also the patron of the WIEF, said there were some encouraging signs, citing as an example, the world beginning to appreciate the need for an alternative arrangement to the current international financial system.
He said there were discussions on the need for regulations and prudence in the management of the financial system and at the same time, Islamic finance was gaining credibility as an alternative system.
"Islamic finance is fundamentally based on the principle of 'no risk, no reward'. Only those who decide to take risks will benefit," he said, adding that there was a huge departure from conventional finance where considerable gains could still be made on zero-risk.
Abdullah said such a system has opened the doors to irresponsible lending where greed has been allowed to take control, citing the sub-prime mortgage crisis as the classic case.
He said the second challenge was for Muslim countries to be continuously innovative and come up with new Islamic finance products.
"To be competitive, they need to develop products which can set themselves apart from their conventional counterparts. We need to explore ways to create attractive financial packages. Indeed this is a daunting task but I am confident that, with collective effort and dedication, this will not be beyond our means to do so," he said.
Abdullah urged Muslim countries to attract more young and bright practitioners to join the Islamic finance industry as they were crucial for developing the intellectual capacity to meet the above challenges.
"To enlarge the pool of intellectuals, Muslim countries must encourage more students to embark on professional studies in Islamic finance and more academies such as the International Centre for Education in Islamic Finance in Kuala Lumpur should be set up in Muslim countries.
"The Islamic Development Bank can also play a pivotal role here," he said.
On the global financial crisis, he said, it was obvious the conventional financial system has collapsed with serious implications on the global economy, causing numerous countries to struggle to overcome recession.
"Massive funds are being pumped in to revitalise their respective economies. We have inherited a system where people can trade what they do not own and the resulting inflationary pressures on the global market have caused immense damage to the economic well-being of the world's poor," he said.
He said such was the impact of unbridled greed in a financial system with no accountability on money lending.
"The question before us now is -- How do we turn this huge adversity into an opportunity for the Muslim world?" he asked some 1,000 participants at the forum, which ended today.
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