Welcoming Remarks by Datuk Ahmad Hizzad Baharuddin for IIFM Workshop on Islamic Finance


10th May 2016

Mr. Khalid Hamad
Chairman of the International Islamic Financial Market,

Mr. Ijlal Ahmed Alvi
Chief Executive Officer of the International Islamic Financial Market,

Distinguished Guests,

Ladies and Gentlemen,

Assalaamu’alaykum Warahmatullahi Wabarakatuh and good morning.

It is an honour for me to welcome you all to this workshop on Islamic finance. The workshops and seminars organised by the International Islamic Financial Market (IIFM) in various jurisdictions across the globe have drawn encouraging response from the members and the industry. These workshops provide an important platform for IIFM to engage with the industry players in promoting greater awareness and understanding on the standardisation efforts spearheaded by the IIFM. Such intellectual interaction between IIFM and the industry players on the expectations and issues of concern would pave the way for greater appreciation and adoption of the standards to advance further the development of Islamic financial markets for the benefit of all the stakeholders.

Ladies and Gentlemen,

Alhamdulillah, Islamic finance is fast expanding its global footprints. In this decade, we see exciting developments and a profound interest in Islamic finance beyond its key jurisdictions in the Middle East and South East Asia. Indeed, the core principles underlying Islamic finance in terms of its direct linkages to real and sustainable economic activity, advocating risk and reward sharing on principles of morality and ethics in business conduct as well as the rules for fair and just dealings are increasingly recognised as the appropriate way forward for achieving global financial stability. As Islamic finance becomes more entrenched in Islamic countries and gains traction in non-Islamic countries, it would serve to enhance and strengthen the interlinkages between economies, facilitating international trade and cross border investment activities.

This growing internationalisation of Islamic finance and its rapid integration into the international financial system have been reinforced by enhanced resilience and strength of the global Islamic financial system. International Islamic institutions such as the IIFM, the Islamic Financial Services Board, the Islamic Development Bank, the Accounting and Auditing Organization for Islamic Financial Institutions and the International Islamic Liquidity Management Corporation have played a pivotal role in strengthening the infrastructure of the Islamic financial system, contributing towards building a solid foundation for the progressive growth of Islamic finance that is underpinned with stability while the INCEIF and international associations like CIBAFI focus on talent developments. This marks as a legacy that would bring immense benefits to the future generations.

The IIFM, with more than a decade since its establishment in 2002, as a key standard-setting organisation for the Islamic financial services industry has achieved commendable efforts In promoting the unification of the Islamic financial market, particularly through the standardisation of Islamic capital and money market products, documentations and related processes globally. To date, the IIFM has made significant progress with the publication of six standard documents and product templates while the development of several other standards will soon commence. Given the importance of these efforts, the mandate of the IIFM has been expanded further to incorporate other segments of the financial market including corporate and trade finance agreements. The initiatives and milestones achieved by the IIFM have brought tremendous benefits to the industry in terms of addressing the issues confronting the Islamic financial institutions, strengthening their risk management capabilities and increasing efficiency in a cost-effective manner.

Ladies and Gentlemen,

Going forward, as the internationalisation of Islamic finance and its integration into the global financial system intensifies, standardised documentations in line with international standards will become more critical in strengthening financial, trade and investment linkages across borders. As we operate in a global economic and financial environment with growing uncertainties and profound systemic implications, addressing liquidity and risk management issues associated with cross border financial flows have also become a formidable challenge. Against this backdrop, the role of the IIFM is instrumental and paramount. IIFM’s standardised agreements provide the Islamic financial institutions with globally recognised cross border liquidity management and hedging tools that will help them to mitigate risks associated with cash flow management, currency fluctuations and rate of return mismatches. A distinct advantage would b the shariah endorsement of these documents by renowned international shariah scholars that promotes harmonisation of the shariah interpretations across the various jurisdictions.

Islamic financial institutions can therefore derive significant advantages from the membership in the IIFM and adoption of its standards, which I should say is growing in Malaysia. We hope to see more Islamic financial institutions participating as members of the IIFM and playing an active role in deliberating and shaping the standards being developed by the IIFM. This would contribute towards achieving universal acceptance and effective adoption of the IIFM agreements. Continuous and stronger support for the IIFM by the market players and other stakeholders in the Islamic financial services industry would collectively enhance the potential of the IIFM in fulfilling the future requirements of the industry. Our concerted efforts today will chart the path to realise our dreams of a strong and dynamic Islamic financial services industry that would bring a more balanced and equitable growth as well as a greater shared prosperity for all.

I therefore wish you a productive workshop ahead and look forward to the constructive outcomes of this engagement. For the international delegates, welcome to Malaysia and hope you will have a memorable stay in Kuala Lumpur.

Thank you.
Ahmad Hizzad Baharuddin
Director General of Labuan FSA
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