For ewor d

Six years have passed since the financial crisis brought the world to its knees. The tsunami that
swept the global financial system has resulted in widespread financial reforms, unprecedented
change in the pace and pattern of globalisation and a greater call for a balance between the
interests and requirements of the real economy with that of the financial services industry. The
Islamic financial services industry has not only responded to these forces of change but is also
transforming the financial world by becoming an increasingly important part of the landscape.
Islamic finance has attained significant progress on several fronts including a greater diversity
of players and a wide range of products and services. The evolution of Islamic finance from
being domestic-centric to becoming increasingly internationalized is reflected in its growth size
and product sophistication. A noteworthy observation is the strategic role of Islamic finance in
strengthening the financial and economic linkages between emerging economies.
A major contributing factor driving the internationalisation of Islamic finance has been the
sukuk market. To date, sukuk has been widely used to meet the huge investment and financing
requirements in emerging market economies, especially in Asia and the Gulf Cooperation
Council countries. The total sukuk issued in 2012 stood at USD144 billion and it appears that
the trend will continue in 2013. Malaysia, the pioneer in the use of sukuk to fund infrastructure
projects, continues to remain atop the sukuk podium worldwide and is recognized as the Global
Sukuk Center.
Islamic finance must be able to move beyond its current concentration on retail banking and
infrastructure financing and diversify into growth areas such as the halal industry. The global
halal industry is estimated at USD2 trillion, which is almost 25% more than the current size of
the Islamic financial services industry, which stands at USD1.6 trillion. The traditional definition
of a halal market has expanded beyond food to include healthcare products, cosmetics, medical
equipment, pharmaceuticals, services and lifestyles. Although both industries are demand
driven, serving the same market of 1.8 billion Muslims worldwide, and have the same values and
principles, they have surprisingly developed quite independently of each other.
This is a real opportunity to explore an avenue of collaboration that would be of tremendous
benefit to both industries. The halal industry is a 2 trillion dollar opportunity that can effectively
utilise the available funding from Islamic financial institutions. Malaysia, which is a global centre
of excellence in Islamic finance, is also emerging as a leader in the promotion of halal goods and
services.
The rising concerns of Muslim consumers for all things halal have heralded an economic and
cultural trend that is of global magnitude. The convergence of Islamic finance and the halal
industry will provide the ideal boost to further accelerate the development of the Islamic
financial services industry and elevate it to a higher plane.
RAJA NAZRIN SHAH
REGENT OF PERAK, MALAYSIA
Financial Ambassador of the Malaysia
International Islamic Financial Centre