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Daily Cover
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OMAN:
Islamic Finance news
has learnt that the first licenses for Islamic banking windows in the
sultanate are expected to be issued by the second week of January next year,
following the release of its Islamic Banking Regulatory Framework (IBRF).
Qaboos Said Al Said, the sultan of Oman, has already
approved the draft regulations, which will now be followed by the Central
Bank of Oman’s issuance of the new rules.
“The earliest expected date of any formal license to be
issued would be around the first or second week of January,” said a source.
Six conventional banks have applied for Islamic window
licenses, two of which comprise BankDhofar and BankMuscat. Oman’s first two
fully-fledged Islamic banks, Alizz Islamic Bank and Bank Nizwa have commenced
operations this year, after authorities last year announced their approval
for Islamic banking in the sultanate.
Meanwhile, Ernst & Young’s World Islamic Banking
Competitiveness Report 2013 has warned that Islamic banks’ profitability
continues to lag behind conventional banks operating in the same country.
Therefore, could Oman’s Islamic banks struggle to compete
with their conventional counterparts?
Nonetheless, with strong royal and government support
encouraging the rapid development of Islamic finance in Oman, 2013 could just
be the year for the industry to take off in the sultanate.
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Monday, December 31, 2012
Oman’s Islamic banking industry ready to take flight
Malaysia losing shine as global Islamic finance hub?
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Daily Cover
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GLOBAL:
As the Islamic finance industry continues growing, Malaysia’s status as the
industry’s global hub appears to be coming under threat from Saudi Arabia’s
burgeoning market for Shariah compliant finance, with the kingdom now home to
the world’s largest amount of Islamic banking assets, worth US$207 billion in
2011.
According to Ernst & Young’s World Islamic Banking
Competitiveness Report 2013, which projects global Islamic banking assets
crossing the US$1.8 trillion mark next year, Malaysia trails Saudi in second
place with total Islamic banking assets of US$106 billion. The UAE,
meanwhile, ranked third with total assets of US$75 billion.
A report by Malaysian rating agency RAM however, has
highlighted Malaysia’s position as the top destination for
ringgit-denominated Sukuk issuances originating from Asia and the GCC.
Malaysia issued a staggering US$273.2 billion-worth of
sovereign and privately placed Sukuk, accounting for 69% of the global Sukuk
market, as at the end of September 2012. Malaysian sovereign Sukuk alone
accounted for US$183.2 billion, or 46.3%, of all the Sukuk issued, noted RAM.
Dealogic data also shows that for the last 12 months up to
the 11th December, Malaysian Sukuk issuances continue to lead the
market, at US$28.8 billion, against US$8.8 billion-worth of offerings from
Saudi.
Saudi’s market has however rapidly gained traction in 2012,
with the General Authority for Civil Aviation’s US$4 billion sovereign Sukuk
issuance at the beginning of this year providing the first rumblings of
Malaysia’s traditional leadership position in the Sukuk market coming under
threat.
Furthermore, Ernst and Young’s report also highlighted new
markets for Islamic finance on the horizon, such as Egypt, Indonesia, Iraq
and Libya, with a number of establishing and new banks considering
introducing Islamic banking operations in those countries.
Gordon Bennie, a partner and the MENA Financial Services
Leader at Ernst & Young, said that: “10 of the world’s 25 rapid growth
garkets have large Muslim populations and present significant growth
prospects for Islamic banking. The fast growth economies now form almost half
of the global GDP and remain the main contributors to overall global growth.
The outlook for Islamic banking in these markets is bright.”
With new entrants and competition heating up in the Islamic
finance industry, Malaysia may just be losing its shine as the industry’s
global hub.
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RAM Ratings reaffirms ratings of Poh Kong’s Islamic debt issue
Published on 26 December 2012
RAM Ratings has reaffirmed the
respective long- and short-term ratings of Poh Kong Holdings Berhad’s (“Poh
Kong” or “the Group”) RM150 million Danajamin-Guaranteed Islamic Commercial
Papers/Islamic Medium-Term Notes Programme (2011/2018) (“ICP/IMTN”) at AAA(fg)
and P1. The long-term rating carries a stable outlook. The AAA(fg) rating of
the ICP/IMTN reflects the unconditional and irrevocable guarantee extended by
Danajamin Nasional Berhad (“Danajamin”, rated AAA/Stable/P1), which enhances
the credit profile of the debt issue beyond the Group’s stand-alone credit
strength.
The P1 rating and Poh Kong’s
stand-alone credit profile are supported by the Group’s established reputation
and market position as Malaysia’s largest jewellery retail chain. As at
end-July 2012, Poh Kong had 101 retail outlets in the country. Its favourable
cashflow protection metrics and manageable balance sheet continue to support
its credit standing. The Group’s liquidity profile is considered strong, enhanced
by its gold inventory, which can be liquidated to meet its financial
obligations if required.
Poh Kong’s credit profile is
moderated by its vulnerability to volatile gold prices. While the retail
mark-up on yellow gold, to some extent, buffers against price volatility, the
Group’s profitability remains susceptible to the risk of sharp declines in the
price of gold. Its working capital requirement is also hefty, amid its long
inventory cycle and lofty gold prices. Poh Kong remains exposed to market
competition vis-Ã -vis fast-changing industry trends and customer sensitivity to
gold price movements. Nevertheless, demand for yellow gold is expected to
remain resilient over the long term given its universally recognised value and
Malaysians’ view of yellow gold jewellery as a customary gift on special
occasions.
In tandem with the appreciation
in the price of gold (+20.6%) and a higher sales volume from an enlarged
network, Poh Kong’s top line rose 19.9% year-on-year to RM830.12 million in FYE
31 July 2012 (“FY Jul 2012”). Notwithstanding heftier operating expenses from
an expanded network, higher gold prices widened the Group’s adjusted operating
profit before depreciation, interest and tax margin to 13.10% (FY July 2011:
12.85%). Nevertheless, greater debt assumption for its hefty working capital
and network expansion needs had increased its total adjusted debt to RM247.57
million as at end-July 2012 (end-July 2011: RM195.44 million), resulting in a
higher adjusted gearing ratio of 0.63 times (FY Jul 2011: 0.56 times). Poh
Kong’s adjusted funds from operations debt cover, however, stayed stable at
0.36 times (FY Jul 2011: 0.38 times), given its improved showing during the
year.
“Poh Kong’s plans to open
between 5 and 8 outlets in FY July 2013 and its corresponding working capital
needs amid an environment of lofty gold prices, are expected to entail further
debt funding. This increase in debt level is expected to moderate the Group’s
adjusted gearing ratio to 0.7 times, while contributions from an expanded
network are envisaged to maintain its adjusted funds from operations debt cover
at about 0.3 times,” notes Kevin Lim, RAM Ratings’ Head of Consumer and
Industrial Ratings.
Media contact
Juliana Koay
(603) 7628 1169
Sunday, December 30, 2012
Governor's keynote address at the 8th World Islamic Economic Forum (WIEF) - "Banking on Islamic Finance: From Legality to Economic Value", 6 December 2012
Governor's Keynote Address at the 8th World
Islamic Economic Forum (WIEF) - “Banking on Islamic Finance: From
Legality to Economic Value”
Last Updated : 10 Dec 2012
Governor's Keynote Address
at the 8th World Islamic Economic Forum (WIEF) -
“Banking on Islamic Finance: From Legality to Economic Value”
Persada Johor International Convention Centre
6 December 2012
Powerful
forces of change are transforming the functioning of the international
financial system and the global economy. In the aftermath of the global
financial crisis, the quest has been to build financial systems that
will best serve the real economy, that provides financial intermediation
that promotes sustainable growth through productive and responsible
innovation, and that will be resilient to shocks and less prone to
crisis. There is tremendous potential to draw on the economic value that
Islamic finance has to offer. In realising this potential, in a now
more challenging environment, will depend on our capacity to build new
capabilities that will unleash the inherent intrinsic value propositions
of Islamic finance that supports and energises the real economy.Persada Johor International Convention Centre
6 December 2012
It is my honour to participate in this 8th World Islamic Economic Forum in my hometown, Johor Bahru to speak on the topic “Banking on Islamic Finance: From Legality to Economic Value”. The first part of my remarks will elaborate on the economic value of Islamic finance, in terms of its emphasis on the close linkage to the real economy, in terms of its merit as a potent tool for enhancing financial inclusion, and in terms of its emergence as a vehicle in bridging economies and strengthening economic and financial linkages, in particular between emerging economies.
The second part of my remarks will touch on three key imperatives that will be important to the ability of Islamic finance to enhance its value proposition to the global economy. These include the legal framework, in particular that which supports its internationalisation, the pool of talent that has the international exposure and orientation and finally the convergence and harmonisation of Shariah interpretations across jurisdictions. These imperatives will be key to reinforcing the gains from the increased economic inter-linkages.
There are three core propositions of Islamic finance that can be harnessed as the industry continues with its rapid growth momentum. The first is to ensure that Islamic finance remains a form of financial intermediation that serves the real economy and that it will continue to benefit the society. In staying true to the inherent principles of Islamic finance, financial transactions will be underpinned by real economic activities. This ensures its close linkage to the economy as it directs the overall intermediation function towards economic production and wealth creation. This therefore requires the continuous development of financial products and services that manifests the value propositions of Islamic finance.
In providing the comprehensive range of the whole spectrum of financial products and services that are in accordance with these principles, Islamic finance has been able to provide the total financial solution to consumers and businesses. The recent growth of Islamic finance has been fuelled by a sustained phase of innovation. The scope of financial business has also increased in sophistication, particularly in the areas of private equity, project finance, sukuk origination as well as fund and wealth management. To sustain this trend, further in-depth applied research is needed to develop more financial products that create such links with the real economy in terms of the operating models, risk management and supporting infrastructure.
The second value proposition of Islamic finance lies in its merit as a potent tool for enhancing financial inclusion and for being beneficial to all members of society. Its immense potential in advancing social-economic development is mirrored by the continuing efforts to introduce Islamic finance offerings in emerging economies, particularly in Asia, the Middle East and African nations in recent years. In bringing unserved communities into the economic mainstream through the financial intermediation process, it can contribute towards poverty alleviation, job creation and more equitable economic growth.
A recent study has however revealed that, despite being a promising financial segment, the availability of microfinance in Muslim-majority economies is either non-existent or still at very early stages. Islamic financing instruments currently comprise only a small fraction of microfinance business in the Organisation of Islamic Cooperation (OIC) countries. While there are success stories on the application of Islamic finance principles in microfinance programs, there is potential to have better models for Islamic microfinance. In addition, it should also integrate with other financial products such as microtakaful and other social welfare tools such as waqf to create a viable and impactful microfinance initiative. There are also immense opportunities for Islamic finance to leverage on the productive potential of small medium enterprises (SMEs) through greater application of equity-based structures in such financing structures. There is seemingly a natural fit between Islamic finance and SMEs financing in that both strongly promote entrepreneurship and value-creating activities.
The third value proposition of Islamic finance refers to its emergence as new vehicle in bridging economies and contributing to increasing the financial linkages, in particular, the emerging markets. Previously Islamic finance was domestic centric. It is now increasingly providing financial solutions for cross border trade and investment. Progressive liberalisation has facilitated the internationalisation of Islamic finance. This has been reinforced by the dynamic pace of innovation in Islamic finance that has widened the range of financial products and services. This internalization process has thus contributed to the more efficient allocation of funds across borders from centres with surplus funds to regions with investment opportunities and to the diversification of risks.
The now more developed Islamic financial markets have been particularly instrumental in intermediating such funds. Sukuk has been a major driving force behind this development since its emergence as an important platform for international fund raising and investment activities that are generating increased cross border flows. The international dimension of the sukuk market has now evolved on many fronts – It has seen the participation of issuers and investors across continents with sukuk origination centres transcending the issuers’ own home countries. The total global sukuk outstanding now domiciles in 20 countries and more recently, there has also been a growing trend for multi-currency sukuk issuances. The sukuk market continues to solidify its position as a leading segment of growth for Islamic finance. Its strong performance is driven by its unique value proposition to both issuers and investors. For investors, it has now become a new asset class with orientation towards real underlying assets in which the issuer cannot leverage in excess of the asset value and in which, the financing must be channeled towards productive purposes. For the issuers, sukuk financing provides a competitive avenue for fund raising and access to a wider investor base of both Islamic and conventional, including the growing investor base looking for a socially-responsible or ethical investment.
Moving forward, there are three key imperatives that will determine the ability of Islamic finance to further enhance its value proposition for the global economy. First, is the evolution of the legal framework that is facilitative to the continuing market evolution and the internationalization of Islamic finance. Whilst the global financial crisis has provided Islamic finance with a unique opportunity in the international financial system, the future success of the industry moving forward, will also depend on its continuing ability to innovate more indigenous shariah-based instruments and evolve business models that strengthen the nexus of Islamic finance with the real economy. An essential part of the overall infrastructure therefore is an effective legal framework to provide an enabling environment that will enforce the legality of contracts according to the Shariah and the regulatory treatment of the new and innovative Islamic financial solutions.
While Islamic finance practitioners and scholars continue to draw from the source of fiqh muamalat to create new and innovative instruments, the legal framework needs to be further strengthened to ensure alignment with new market developments. This is to ensure that it continues to lend certainty and predictability to the innovative products and financial transactions. Furthermore, as Islamic financial activities venture beyond national boundaries, the development of legal frameworks that is facilitative of cross-border transactions is pivotal. There has to be court recognition and acceptance of the Islamic contracts within the common and civil law systems, with a common approach of interpreting the rights of the contracting parties based on Shariah principles, in particular for cross-border transactions.
Malaysia has taken the approach to address this imperative via the Law Harmonisation Committee which was established in 2010. As part of its mandate, the Committee undertakes an objective review on the legislation and proposes the necessary amendments on existing Malaysian laws which are applicable to execute the whole chain of Islamic financial practices. Since its inception, the Law Harmonisation Committee has reviewed seventeen (17) laws in Malaysia and identified the areas that require legislative amendments so that Islamic financial transactions can be conducted in the most legally efficient manner. The work of the Committee will continue to remain relevant as the Islamic financial markets continue to expand and develop new products and business models. This mandate of the Committee will not only ensure that non-Shariah compliant elements in the legal provisions are harmonised, it will also ensure that our laws are facilitative to Islamic financial transactions.
Another major milestone in Malaysia, is the new legal framework for Islamic banking and takaful, which is currently undergoing the legislative process towards its enactment. This new legal framework, will not only streamline the legal requirements across sectors, but will also ensure that the law is reflective of the nature and features of Shariah contracts and that the degree of regulation is commensurate with the level of risks that Islamic financial institutions, markets and products pose to the overall financial system. The greater clarity on the legal and prudential requirements underpinned by Shariah principles will enable participants of the Islamic financial system to align to their practices and expectations accordingly when undertaking Islamic financial business and transactions.
The second imperative relates to the continuous effort to develop the key resources of the industry, by expanding and building new capabilities needed to support its growth and development. There is a critical need to upskill the leadership and technical competency of talents given the increasing complexity of the industry. With broader scope, scale and internationalization, the demands on the capability of talents in Islamic finance industry can only increase. It will require more internationally oriented management teams that have the necessary international exposure and orientation. In addition to education and research to build the expertise in Islamic finance, a more structured framework for capacity-building that includes other key resources including the investment in technology for industry development is also needed.
Such a coordinated effort in capacity-building has been initiated by the Islamic Development Bank (IDB) in support of its member countries in the development of Islamic finance. This is being undertaken through the IDB’s Member Country Partnership Strategy (MCPS) programme. Indeed, in a world of increasing interconnectedness, there is a need for such a strategic approach to capacity-building through cross-border cooperation for the mutual benefit of the members so that growth and development of the industry can be collectively strengthened.
Finally, the third imperative is to accord importance to mutual recognition of Shariah interpretations across jurisdictions and thus contribute towards greater international financial integration. A critical factor that will support this process pertains to the need to enhance awareness in respect of the justifications underlying the Shariah resolutions in the industry. To achieve this greater awareness will require both openness on the grounds for the rulings and in-depth research on the basis of such grounds. A recent study conducted by the International Shariah Research Academy for Islamic Finance (ISRA) on fatwas of Shariah boards in the Asian region and the GCC countries reveals that, contrary to the popular perception, there are more similarities than differences in Shariah resolutions between the two regions. The study by ISRA however further indicates that there is a lack of awareness on the Shariah justifications to most of the resolutions being reviewed. This awareness is essential to pave the way towards greater understanding and nurturing of mutual respect. Whilst there are some initiatives to enhance the greater awareness on the juristic reasoning in Islamic finance, to facilitate greater mutual recognition, it will require greater transparency in the Shariah rulings in addition to constructive dialogue on the grounds of such rulings.
With the efforts of the Islamic Development Bank (IDB), the Islamic Financial Services Board (IFSB) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAIOFI), it has facilitated greater cross-border engagement among practitioners and Shariah scholars. In turn this has contributed to a greater understanding on issues and challenges faced by the industry and the progressive convergence of Shariah views and rulings. More such international collaborative work and engagement would further facilitate this harmonization process.
To navigate amidst turbulent seas to arrive at the new frontier of opportunities in Islamic finance, there is a need for the industry to build on its strengths and achievements thus far, in the pursuit to realize the distinctive value that Islamic finance brings to the global economy. Indeed, Islamic finance needs to leverage on its inherent strengths and demonstrate leadership in the real economic agenda and contribute towards global economic prosperity and stability.
Saturday, December 29, 2012
Keynote speech by YAB Dato' Sri Mohd Najib bin Tun Haji Abdul Razak, Prime Minister of Malaysia at the 8th World Islamic Economic Forum (WIEF), 4 December 2012
Last Updated : 27 Dec 2012
Source By : http://www.8thwief.org/
Assalamualaikum Warahmatullahi Wabarakatuh, A very good morning and Salam Satu Malaysia.
His Excellency Ikililou Dhoinine;
President of the Union of Comoros
His Excellency Tharman Shanmugaratnam;
Deputy Prime Minister and Minister of Finance of Singapore,
His Excellency Syed Naveed Qamar;
Minister Special Representative of the President of Pakistan
His Excellency Dr. Hussain Al Abdulla;
Minister Special Representative of the Prime Minister of Qatar,
His Excellency Al Haj Murad Ebrahim;
Chairman, Moro Islamic Liberation Front,
His Excellency Tan Sri Dr Ahmad Mohamed Ali;
President of the Islamic Development Bank (IDB)
The Honourable Tun Musa Hitam;
Chairman of the World Islamic Economic Forum Foundation,
Your Excellencies,
Distinguished Guests,
Ladies and gentlemen
1. It gives me great pleasure to welcome you all to the 8th World Islamic Economic Forum. I must confess, the last time I spoke here in Johor, the audience were – how shall I put it – more dynamic. More energetic. More spirited. But you should not feel too bad: it was the opening of Asia’s first Legoland, so the average age was somewhat lower!.
2. As we gather here today, the world faces numerous challenges. The global macroeconomic outlook continues to be weak and uncertain. Pockets of prosperity enjoyed by a few countries provide little positive impact on the economic growth of the rest.
3. The US economic recovery is still underway. With no solution to the Eurozone crisis in sight, and poor growth, EU member states are suffering extended austerity measures and threats of separatism. China and India are both experiencing an economic slowdown. Countries affected by the “Arab Spring” or, as some prefer to call it, ‘Arab Awakening’, have yet to complete reform needed to meet the growing expectations of their people. And few bright economic sparks are visible in Africa and Latin America.
4. Amidst the global gloom, developing Muslim countries continue to bear a heavy burden. Many are at the receiving end of policy decisions, with little or no power to influence the global economic agenda. Within such societies, often it is young people who bear the brunt of this inequality. Even in more prosperous countries, evidence suggests young people feel they do not have control over their own economic future.
5. So today, I want to talk about youth and opportunity in Islamic economies. About the changes facing young Muslims across the world, and the hidden wealth of young nations. About the power of economic and political reform to give young people the opportunity they aspire to. And about the challenges we must confront to unlock the true potential of the Ummah.
Ladies and gentleman,
6. Throughout history, Islamic societies have managed major trade routes and vital trade centres. During the Golden Age, Muslim traders established the Islamic Empire and the Arabic language as the predominant forces in world trade. The Ottoman, Safavid, and Mughal empires were economic powerhouse. And over the last century, research shows Islam has been good for growth: witness Turkey’s rapid development, or Indonesia’s sustained expansion. If Islam was corrosive to growth, Malaysia economy would not have expanded on average (i.e Compounded Annual Growth Rate) by 5.8% since 1991.
7. Islamic states are capable not just of economic dynamism, but financial innovation. From forward markets to microfinance, Islamic societies have long been at the cutting edge of capitalism. So, Islam is not a barrier to economic development.
8. Nor is it a barrier to vibrant democracy. As scholars haven noted, Islamic doctrine shows clear democratic thought – recognition of the equality of all believers, development of consultative rule, protection of private property, establishment of justice, celebration of learning, and tolerance of other faiths.
9. and yet, as we saw in the Arab Awakening, many young people cannot see opportunities for themselves. They do not feel they have control over their lives or a stake in their nations. Such pessimism can lead to disengagement, radicalism or emigration. While political freedom is important, it is economic opportunity that young people value most. We are losing some of our young people to apathy and extremist.
10. Our challenge, then, is to grasp the nature of opportunity. To understand what young people in Muslim societies aspire to, so we can help them achieve. To do so, we must understand the changes affecting their lives.
11. So what are these changes? The first is demographic. The Muslim world is experiencing a significant ‘youth bulge’: in 2010, 60% of Muslims were under 30. By 2030, Muslims will make up 26% of the world’s population, but 30% of its youth.
12. what are the implications of this shift? In economic terms, a younger population brings greater pressures to bear on education, and creates a bigger labour force. That in turn requires high investment and capital to utilize the spare capacity. Young people who cannot find work erode family spending power – and government finances.
13. Further down the line, a big demographic change can warp fiscal policy for decades, as ‘baby boomer’ countries are discovering. But in social terms, the short term impact can be even greater. A youth bulge introduces latent energy into a nation’s economy and society. If it is not tapped, it can become a destabilising force.
14. Work brings fulfillment: the feeling of playing an active part in society, and contributing to the community. It also develops the personal skills, self-esteem and discipline that are requisites for success in a competitive world. But with time on their hands and no prospects for employment, a generation of people is growing up without knowing that fulfillment or those skills. In 2010, youth unemployment in the Middle East was 25%; in North Africa, 24%.Unemployment at such levels is toxic. When young people lack opportunity, they grow restless and disenfranchised.
15. Often, sadly, it is more educated youth who miss out. The longer they are unemployed, the harder it is to find work. Careers are blunted as people take low-paid jobs: young people are most likely to be part of the working poor. Many put off starting a family; without a decent job, they cannot marry. And so they remain frustrated – unable to fully transition to adulthood, and denied their independence.
16. Dependency robs these young people of their dignity. With no economic stake in society, they can lose their sense of belonging. That can spill over into hostility to the state, and the institutions that sustain it. From 1970 to 2000, eight out of ten of countries experiencing new civil conflict had populations where 60% were under 30 – just as the Muslim world does today.
17. Muslim youth want economic opportunity. Our response must be to commit to building open and sustainable economies, with education and economic reform that allows our young people to pursue their ambitions. But to understand how those ambitions are framed, we must also understand the second great change in young people’s lives: technology.
18. 21 years ago, there were no websites. Today, there are more than half billion. In the space of one lifetime, the internet has gone from a tiny scientific community into one of the most potent development tools the world has ever known. The internet revolution has changed the way we think about knowledge, opening up opportunities that previously seemed inconceivable.
19. The age of information has its own generation: the digital natives, those who have only ever known a connected world. There are children leaving school now who do not remember life before the internet. The expectations they have – of access to information, and freedom to communicate – are completely different. They do not understand closed systems, or one-way Government. They expect information to be free, democracy to be responsive and communication to be global. They want to play an active role in the digital economy. And if they are not satisfied, they will tell the world in a heartbeat.
20. Great leaps in communication technology often foreshadow democratic developments. So it has proved with mobile internet and social media. Empowered by technology and emboldened by example, young people are able to compare the strengths and weaknesses of their democracies, and articulate their political needs to a global audience. Modern
youth, and modern aspiration, is borderless.
21. This technological shift has implications for the economic sphere in which Muslim youth operate. But its political implications are greater still. We must understand and respond to the emergence of a new, cross-border political consciousness.
Ladies and Gentlemen,
22. These two forces – demography and technology – determine the nature of opportunity for our youth. Socially and economically, young people in Islamic societies want freedom. But it is not the freedom my father’s generation fought for – freedom from colonial oppression. In an age of self-determination and development, they want freedom of opportunity.
23. They want a world-class education, and the freedom to pursue the option it brings. They want to be active participant in new digital spaces. They want strong democratic institutions, and open and accountable government. And they want to play their part in civil society, to build a better nation with their own hands.
24. Our challenge is to stretch ourselves to deliver those freedoms without sacrificing tradition, stability or growth. By responding to the changes they face, we can engage Muslim youth with a clear vision of the future – and harness their untapped potential, for the benefit of all. That will require both leadership and reform.
25. First, we must focus on education. Although access is improving, young people find their qualifications do not match the opportunities available in the job market. We need a greater emphasis on vocational and technical training, and on standards and outcomes, to ensure that learning unlocks opportunity rather than closing it off.
26. we must also continue to open up our economies. Each country in the Muslim world faces its own strengths and challenges; but as a general principle, we must build a more dynamic private sector, and boost our share of world trade. 23% of the world’s population are Muslim, but OIC nations conduct just 8.3% of global trade. We have the headroom; we have the capacity; it is simply a matter of opening our economies. In so doing, we can make our nations more competitive, bringing higher value jobs, and stronger growth.
27. We should pursue structural reforms, to ensure that our economies can compete in the industries of the future. Here the youth are our guide: surveys show that Muslim youth identify the digital economy and green technology as significant in-demand sectors where they ought to have a natural advantage.
28. We must also respond to technological change: recalibrating the way we think about government, and the way we communicate with young people. Our starting point must be recognition of the fundamental principle of the internet: its autonomy. The internet thrives because it exists outside of the control of any one state or authority. It should remain that way. This does not mean unregulated behaviour, but independence. We should preserve the online space as one in which the free exchange of views is encourage, in the best traditions of discourse.
29. We should open our minds to new opportunities in the digital economy. As microfinance and mobile banking has shown, the ability to manage money on the move helps young people gain financial independence and start businesses. We should do more of our business and banking online, and support our digital entrepreneurs.
30. We must also encourage moderation and the practice of tolerance. Polls show that young Muslims want a greater role for religion in public and political life. We should show that this trust is well deserved, by offering a vision of Islam that is moderate and tolerant. And we should embrace the new instruments of Islamic finance – although here I must declare an interest, because Malaysia leads the world in the issuing of sukuk bonds.
31. Finally, we must be prepared to invest in all of our young people – including women, whose unemployment numbers are consistently 10% higher than men. We must put our confidence in Muslim youth as full economic participants: as consumers, employees, and entrepreneurs. And we must be unafraid to encourage change in institutions which stifle young people’s opportunities: reforming public services, supporting appointment by merit, and remaining ever vigilant against corruption.
32. Together, these changes will help us capitalise on our greatest resource: our youth. It is up to us to show leadership, and build economies that are prepared for the future. We must be willing to confront old assumptions and embrace new technologies; to open up our economies and reform politics. This will not always be easy. There will be challenges and uncertainties. But reform is necessary, and history shows us it is right: the periods of greatest Islamic influence were the most intellectually open.
Ladies and gentlemen,
33. As a developing country committed to economic reform, Malaysia has faced some hard choices already. We know we must improve public service delivery, and offer new opportunities to meet the growing expectations of our people. This World Islamic Economic Forum will explore these issues. The focus on nurturing the potential of our young entrepreneurs and business leaders is commendable, and I am the sessions on the democratization of education and the role of technology will be fascinating. So me leave you with one thought.
34. I believe we should see our youth not as a liability, but as an asset; an untapped resource that will allow us to develop and modernise. Managed properly, this resource can lay the foundations for great success. By focusing on economic and political reform, we can present a compelling vision of a future defined by opportunity, not dependency.
35. In so doing, I am sure that we can bring young people into the fold; giving them a meaningful stake in society. That is not only a powerful safeguard against disenfranchisement and extremism. It is our responsibility to the greatest Muslim generation that has ever lived.
Thank you
Source By : http://www.8thwief.org/
KEYNOTE SPEECH
YAB DATO’ SRI MOHD NAJIB BIN TUN HAJI ABDUL RAZAK
PRIME MINISTER OF MALAYSIA
AT THE 8th WORLD ISLAMIC ECONOMIC FORUM (WIEF)
“CHANGING TRENDS, NEW OPPORTUNITIES”
ON 4th DECEMBER 2012 (TUESDAY)
PERSADA JOHOR INTERNATIONAL CONVENTION CENTRE
JOHOR BHARU, JOHOR DARUL TA’ZIM
YAB DATO’ SRI MOHD NAJIB BIN TUN HAJI ABDUL RAZAK
PRIME MINISTER OF MALAYSIA
AT THE 8th WORLD ISLAMIC ECONOMIC FORUM (WIEF)
“CHANGING TRENDS, NEW OPPORTUNITIES”
ON 4th DECEMBER 2012 (TUESDAY)
PERSADA JOHOR INTERNATIONAL CONVENTION CENTRE
JOHOR BHARU, JOHOR DARUL TA’ZIM
Bismillahirahmanirahim
Assalamualaikum Warahmatullahi Wabarakatuh, A very good morning and Salam Satu Malaysia.
His Excellency Ikililou Dhoinine;
President of the Union of Comoros
His Excellency Tharman Shanmugaratnam;
Deputy Prime Minister and Minister of Finance of Singapore,
His Excellency Syed Naveed Qamar;
Minister Special Representative of the President of Pakistan
His Excellency Dr. Hussain Al Abdulla;
Minister Special Representative of the Prime Minister of Qatar,
His Excellency Al Haj Murad Ebrahim;
Chairman, Moro Islamic Liberation Front,
His Excellency Tan Sri Dr Ahmad Mohamed Ali;
President of the Islamic Development Bank (IDB)
The Honourable Tun Musa Hitam;
Chairman of the World Islamic Economic Forum Foundation,
Your Excellencies,
Distinguished Guests,
Ladies and gentlemen
1. It gives me great pleasure to welcome you all to the 8th World Islamic Economic Forum. I must confess, the last time I spoke here in Johor, the audience were – how shall I put it – more dynamic. More energetic. More spirited. But you should not feel too bad: it was the opening of Asia’s first Legoland, so the average age was somewhat lower!.
2. As we gather here today, the world faces numerous challenges. The global macroeconomic outlook continues to be weak and uncertain. Pockets of prosperity enjoyed by a few countries provide little positive impact on the economic growth of the rest.
3. The US economic recovery is still underway. With no solution to the Eurozone crisis in sight, and poor growth, EU member states are suffering extended austerity measures and threats of separatism. China and India are both experiencing an economic slowdown. Countries affected by the “Arab Spring” or, as some prefer to call it, ‘Arab Awakening’, have yet to complete reform needed to meet the growing expectations of their people. And few bright economic sparks are visible in Africa and Latin America.
4. Amidst the global gloom, developing Muslim countries continue to bear a heavy burden. Many are at the receiving end of policy decisions, with little or no power to influence the global economic agenda. Within such societies, often it is young people who bear the brunt of this inequality. Even in more prosperous countries, evidence suggests young people feel they do not have control over their own economic future.
5. So today, I want to talk about youth and opportunity in Islamic economies. About the changes facing young Muslims across the world, and the hidden wealth of young nations. About the power of economic and political reform to give young people the opportunity they aspire to. And about the challenges we must confront to unlock the true potential of the Ummah.
Ladies and gentleman,
6. Throughout history, Islamic societies have managed major trade routes and vital trade centres. During the Golden Age, Muslim traders established the Islamic Empire and the Arabic language as the predominant forces in world trade. The Ottoman, Safavid, and Mughal empires were economic powerhouse. And over the last century, research shows Islam has been good for growth: witness Turkey’s rapid development, or Indonesia’s sustained expansion. If Islam was corrosive to growth, Malaysia economy would not have expanded on average (i.e Compounded Annual Growth Rate) by 5.8% since 1991.
7. Islamic states are capable not just of economic dynamism, but financial innovation. From forward markets to microfinance, Islamic societies have long been at the cutting edge of capitalism. So, Islam is not a barrier to economic development.
8. Nor is it a barrier to vibrant democracy. As scholars haven noted, Islamic doctrine shows clear democratic thought – recognition of the equality of all believers, development of consultative rule, protection of private property, establishment of justice, celebration of learning, and tolerance of other faiths.
9. and yet, as we saw in the Arab Awakening, many young people cannot see opportunities for themselves. They do not feel they have control over their lives or a stake in their nations. Such pessimism can lead to disengagement, radicalism or emigration. While political freedom is important, it is economic opportunity that young people value most. We are losing some of our young people to apathy and extremist.
10. Our challenge, then, is to grasp the nature of opportunity. To understand what young people in Muslim societies aspire to, so we can help them achieve. To do so, we must understand the changes affecting their lives.
11. So what are these changes? The first is demographic. The Muslim world is experiencing a significant ‘youth bulge’: in 2010, 60% of Muslims were under 30. By 2030, Muslims will make up 26% of the world’s population, but 30% of its youth.
12. what are the implications of this shift? In economic terms, a younger population brings greater pressures to bear on education, and creates a bigger labour force. That in turn requires high investment and capital to utilize the spare capacity. Young people who cannot find work erode family spending power – and government finances.
13. Further down the line, a big demographic change can warp fiscal policy for decades, as ‘baby boomer’ countries are discovering. But in social terms, the short term impact can be even greater. A youth bulge introduces latent energy into a nation’s economy and society. If it is not tapped, it can become a destabilising force.
14. Work brings fulfillment: the feeling of playing an active part in society, and contributing to the community. It also develops the personal skills, self-esteem and discipline that are requisites for success in a competitive world. But with time on their hands and no prospects for employment, a generation of people is growing up without knowing that fulfillment or those skills. In 2010, youth unemployment in the Middle East was 25%; in North Africa, 24%.Unemployment at such levels is toxic. When young people lack opportunity, they grow restless and disenfranchised.
15. Often, sadly, it is more educated youth who miss out. The longer they are unemployed, the harder it is to find work. Careers are blunted as people take low-paid jobs: young people are most likely to be part of the working poor. Many put off starting a family; without a decent job, they cannot marry. And so they remain frustrated – unable to fully transition to adulthood, and denied their independence.
16. Dependency robs these young people of their dignity. With no economic stake in society, they can lose their sense of belonging. That can spill over into hostility to the state, and the institutions that sustain it. From 1970 to 2000, eight out of ten of countries experiencing new civil conflict had populations where 60% were under 30 – just as the Muslim world does today.
17. Muslim youth want economic opportunity. Our response must be to commit to building open and sustainable economies, with education and economic reform that allows our young people to pursue their ambitions. But to understand how those ambitions are framed, we must also understand the second great change in young people’s lives: technology.
18. 21 years ago, there were no websites. Today, there are more than half billion. In the space of one lifetime, the internet has gone from a tiny scientific community into one of the most potent development tools the world has ever known. The internet revolution has changed the way we think about knowledge, opening up opportunities that previously seemed inconceivable.
19. The age of information has its own generation: the digital natives, those who have only ever known a connected world. There are children leaving school now who do not remember life before the internet. The expectations they have – of access to information, and freedom to communicate – are completely different. They do not understand closed systems, or one-way Government. They expect information to be free, democracy to be responsive and communication to be global. They want to play an active role in the digital economy. And if they are not satisfied, they will tell the world in a heartbeat.
20. Great leaps in communication technology often foreshadow democratic developments. So it has proved with mobile internet and social media. Empowered by technology and emboldened by example, young people are able to compare the strengths and weaknesses of their democracies, and articulate their political needs to a global audience. Modern
youth, and modern aspiration, is borderless.
21. This technological shift has implications for the economic sphere in which Muslim youth operate. But its political implications are greater still. We must understand and respond to the emergence of a new, cross-border political consciousness.
Ladies and Gentlemen,
22. These two forces – demography and technology – determine the nature of opportunity for our youth. Socially and economically, young people in Islamic societies want freedom. But it is not the freedom my father’s generation fought for – freedom from colonial oppression. In an age of self-determination and development, they want freedom of opportunity.
23. They want a world-class education, and the freedom to pursue the option it brings. They want to be active participant in new digital spaces. They want strong democratic institutions, and open and accountable government. And they want to play their part in civil society, to build a better nation with their own hands.
24. Our challenge is to stretch ourselves to deliver those freedoms without sacrificing tradition, stability or growth. By responding to the changes they face, we can engage Muslim youth with a clear vision of the future – and harness their untapped potential, for the benefit of all. That will require both leadership and reform.
25. First, we must focus on education. Although access is improving, young people find their qualifications do not match the opportunities available in the job market. We need a greater emphasis on vocational and technical training, and on standards and outcomes, to ensure that learning unlocks opportunity rather than closing it off.
26. we must also continue to open up our economies. Each country in the Muslim world faces its own strengths and challenges; but as a general principle, we must build a more dynamic private sector, and boost our share of world trade. 23% of the world’s population are Muslim, but OIC nations conduct just 8.3% of global trade. We have the headroom; we have the capacity; it is simply a matter of opening our economies. In so doing, we can make our nations more competitive, bringing higher value jobs, and stronger growth.
27. We should pursue structural reforms, to ensure that our economies can compete in the industries of the future. Here the youth are our guide: surveys show that Muslim youth identify the digital economy and green technology as significant in-demand sectors where they ought to have a natural advantage.
28. We must also respond to technological change: recalibrating the way we think about government, and the way we communicate with young people. Our starting point must be recognition of the fundamental principle of the internet: its autonomy. The internet thrives because it exists outside of the control of any one state or authority. It should remain that way. This does not mean unregulated behaviour, but independence. We should preserve the online space as one in which the free exchange of views is encourage, in the best traditions of discourse.
29. We should open our minds to new opportunities in the digital economy. As microfinance and mobile banking has shown, the ability to manage money on the move helps young people gain financial independence and start businesses. We should do more of our business and banking online, and support our digital entrepreneurs.
30. We must also encourage moderation and the practice of tolerance. Polls show that young Muslims want a greater role for religion in public and political life. We should show that this trust is well deserved, by offering a vision of Islam that is moderate and tolerant. And we should embrace the new instruments of Islamic finance – although here I must declare an interest, because Malaysia leads the world in the issuing of sukuk bonds.
31. Finally, we must be prepared to invest in all of our young people – including women, whose unemployment numbers are consistently 10% higher than men. We must put our confidence in Muslim youth as full economic participants: as consumers, employees, and entrepreneurs. And we must be unafraid to encourage change in institutions which stifle young people’s opportunities: reforming public services, supporting appointment by merit, and remaining ever vigilant against corruption.
32. Together, these changes will help us capitalise on our greatest resource: our youth. It is up to us to show leadership, and build economies that are prepared for the future. We must be willing to confront old assumptions and embrace new technologies; to open up our economies and reform politics. This will not always be easy. There will be challenges and uncertainties. But reform is necessary, and history shows us it is right: the periods of greatest Islamic influence were the most intellectually open.
Ladies and gentlemen,
33. As a developing country committed to economic reform, Malaysia has faced some hard choices already. We know we must improve public service delivery, and offer new opportunities to meet the growing expectations of our people. This World Islamic Economic Forum will explore these issues. The focus on nurturing the potential of our young entrepreneurs and business leaders is commendable, and I am the sessions on the democratization of education and the role of technology will be fascinating. So me leave you with one thought.
34. I believe we should see our youth not as a liability, but as an asset; an untapped resource that will allow us to develop and modernise. Managed properly, this resource can lay the foundations for great success. By focusing on economic and political reform, we can present a compelling vision of a future defined by opportunity, not dependency.
35. In so doing, I am sure that we can bring young people into the fold; giving them a meaningful stake in society. That is not only a powerful safeguard against disenfranchisement and extremism. It is our responsibility to the greatest Muslim generation that has ever lived.
Thank you
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