Objective

- To acknowledge the development of financial system in Malaysia

- To explore the history of the financial system that occurred Malaysia
- To identify the characteristics of financial system in Malaysia

Introduction

Malaya started their financial system by practicing barter system before 1800. In the late 1800,
money revolution takes place through the colonial invasion by practicing silver dollars. These silver
dollars having some issues regarding the value of the silver fluctuated and gold takes place. The practice
of gold standard did not last long. By 1930, Malayan dollar was produced. By that time, all the financial
practice takes place and expand until now.

History of financial system in Malaysia

Time Event
August Establishment of an interest-free institution, Pilgrim's Management and Fund
1969 Board (PMFB) or Tabung Haji.
PMFB was set up through a merger of the Malayan Muslim Pilgrim Savings
Corporation and the Pilgrims Affairs Department of the government to promote
and co-ordinate all aspects of activities connected with the Muslims going on
pilgrimage.

1980 Bumiputra Economic Congress 1980 passed a resolution urging the government
to allow the PMFB to establish an Islamic bank in Malaysia.
There are committees were formed to study the various aspects of Islamic
banking and its implementation in Malaysia.
These efforts were taken independently by such organization as the Muslim
Welfare Organization of Malaysia (PERKIM), PMFB, and the Development Bank
of Malaysia Berhad.
In various seminars at the state levels, similar resolutions were passed urging
the government to establish Islamic banks with the PMFB playing a major role.

March At the "National Seminar on the Concept of Development in Islam" organized by

1981 Universiti Kebangsaan Malaysia (UKM), another resolution was passed urging
the government to take an immediate initiative to enact a special provision of
the laws as the first step towards establishing Islamic Banks and financial
institutions consistent with Islamic principles.
Here again, seminars agreed that PMFB should be given the task of initiating the
implementation of the project.

July 1981 The government agreed to form a National Steering Committee of Islamic Banks.
This committee was led by Raja Tan Sri Mohar, the special advisor to Prime
Minister and it set up three technical committees, namely the Religious
Committee, Legal Committee, and Banking Operation Committee.

1983 Bank Islam Malaysia Berhad (BIMB) was established.

Promulgation of a new Islamic Banking Act 1983 with only certain minor changes
being made to the existing Banking Act 1973.

1989 Bafia was enacted

1990 Rating agency Malaysia

October Labuan International Offshore Financial Centre(IOFC) was established

1990
1993 The Securities Commission
December Capital Market was developed
1995
1998 The National Economic Action Council (NEAC) was set up
1
september
1998


Discussion

1. How will Malaysians face the financial crisis that happen these days that has cause massive
deflation?
2. How the financial institutions and other companies tackle this problems in order to regain
stability without burdening the public directly?
3. How can we predict the financial system in Malaysia if this crisis remained unsolved?

Conclusion

It is conclude that the Malaysian financial system has grown in order to make it compatible to the
current economy.

References