The Islamic Finance Handbook: A Practitioner's Guide to the Global Markets

Chapter 18MalaysiaWorld's Islamic Finance Marketplace

Wan Abdul Rahim Kamil

Consultant, Islamic Capital Market, Securities Commission Malaysia

The establishment of the Pilgrims Management and Fund Board of Malaysia in 1963 as an institution of savings for Muslims to fulfill their religious obligation to perform the Hajj to Saudi Arabia has provided the Muslims in Malaysia with a very efficient platform for financial inclusion. Further development followed with the establishment of Bank Islam Malaysia in 1983 under the Islamic Banking Act, which empowered Bank Negara Malaysia to supervise and regulate Islamic banks similar to the other licensed banks. The first takaful company was established under the Takaful Act in 1984.

The Government Investment Act of 1983 was enacted at the same time as the incorporation of Bank Islam to empower the government of Malaysia to produce government investment issues, which are government securities based on Shari'ah principles. They are regarded as liquid assets for the Islamic banks and takaful companies to invest to comply with the prescribed liquidity requirements as well as to invest their surplus funds.

In Malaysia, the regulators of Islamic finance are Bank Negara and the Securities Commission (SC), which govern the banking and takaful industry and the capital market industry, respectively. Malaysia's first-mover advantage has allowed it to establish the world's most comprehensive and sophisticated Islamic finance marketplace, which has ...