Japan Urged to Form Islamic Finance Alliance with Malaysia
Speaking at the World Islamic Economic Forum Roundtable, an event co-hosted by the Alliance Forum Foundation and the World Islamic Economic Forum, Datuk Seri Najib Razak, the Prime Minister of Malaysia, urged Japan to engage in activities related to Islamic finance in partnership with Malaysia. He opined that the combination of Japan’s industrial technology and Malaysia’s finance expertise would give rise to the most powerful alliance in East and Southeast Asia.
Tun Musa Hitam, the chairman of the World Islamic Economic Forum; Datuk Seri Idris Jala, a minister in the PM’s department; and several representatives from 31 countries were also present at the World Islamic Economic Forum Roundtable. According to Najib, demand is very low for Islamic finance in Southeast Asia in spite of the fast rate of growth in the region.
Indonesia’s potential, for example, has hardly been tapped. The Philippines, Thailand and Cambodia have interest as well. So, this is an opportunity, and we welcome Japan’s involvement in these new and expanding markets.
Najib stated that he had first discussed the idea of Japan getting involved in Islamic finance when he met Shinzo Abe, the prime minister of Japan, in July 2013. The two had
discussed support from the Japanese government and its authorities to encourage Japanese enterprises, financial institutions, and investors to engage in Islamic finance related activities with Malaysia.
In return, Malaysia would provide the required technical expertise. He said that Malaysia owes its success in Islamic finance related activities partly to its ability to maintain its position as the world’s biggest issuer of sukuk.
Najib said that assets related to international Islamic finance are worth as much as $2 trillion today. Though a small amount when held in comparison with traditional financial assets, he pointed out that its compounded growth rate per annum from 2009 to 2014 has been 17 percent.
Pointing out the fact that financial institutions in Japan are getting involved in activities related to Islamic finance, he said that the Bank of Tokyo Mitsubishi UFJ bears the credit of becoming the country’s first commercial bank to start issuing sukuk through its subsidiary in Malaysia in September 2014. A partnership between Malaysia and Japan could be significant not only in these two countries, but also in countries where their corporations operate their businesses.
Regarding the need
to invest in tangible infrastructure assets” in Asian countries, he said that the “Islamic finance model is eminently suited for these purposes.