Islamic Financing in Malaysia
Towards Developing A Successful Islamic Financial System:
A Lesson from Malaysia
ABSTRACT
The Islamic financial system in Malaysia has achieved phenomenal growth since its humble beginning in 1963 with the establishment of Pilgrimage Fund or ‘Tabung Haji’. Central Bank of Malaysia reported an average annual growth rate of 18% in the last two decades. Malaysia has been regarded as the role model amongst Organization of Islamic Countries (OIC), in implementing Islamic financial system and has a strong potential to become the Islamic Financial Hub. The purpose of this paper is to elaborate the history, development, foundation, future and the supporting mechanisms of Malaysia’s Islamic financial system. The methodology used in this paper is library research by gathering the relevant information related to the subject from various sources.
KEYWORDS: Islamic Institution History, ‘Shariah’ Compliant, Central Bank of Malaysia Contributions, Supporting Mechanisms to Stay Competitive.
INTRODUCTION: HISTORY & DEVELOPMENT
Malaysia is one of the pioneer countries amongst Organization of Islamic Country (OIC) who has implemented Islamic Financial System. It started from the humble beginning in 1963 with the formation of Pilgrimage Fund which is better known as ‘Tabung Haji’, as the first Islamic savings financial institution. The first fully ‘Shariah’ compliant Islamic Bank was established in 1983 with the name of Bank Islam Malaysia. It was followed by the first Takaful or Islamic Insurance Company under the Takaful Act in 1984. Malaysia has become the role model in implementing Islamic Financing and made progress way ahead of some of the countries in Middle East.
The fast growing Islamic Financing demand has triggered the conventional banks in Malaysia to expand their financing offerings and introduced products and services which begin in 1993. The Islamic Banking virtues were spread across the nation and reach all Malaysian irrespective of race and religion.
A Lesson from Malaysia
ABSTRACT
The Islamic financial system in Malaysia has achieved phenomenal growth since its humble beginning in 1963 with the establishment of Pilgrimage Fund or ‘Tabung Haji’. Central Bank of Malaysia reported an average annual growth rate of 18% in the last two decades. Malaysia has been regarded as the role model amongst Organization of Islamic Countries (OIC), in implementing Islamic financial system and has a strong potential to become the Islamic Financial Hub. The purpose of this paper is to elaborate the history, development, foundation, future and the supporting mechanisms of Malaysia’s Islamic financial system. The methodology used in this paper is library research by gathering the relevant information related to the subject from various sources.
KEYWORDS: Islamic Institution History, ‘Shariah’ Compliant, Central Bank of Malaysia Contributions, Supporting Mechanisms to Stay Competitive.
INTRODUCTION: HISTORY & DEVELOPMENT
Malaysia is one of the pioneer countries amongst Organization of Islamic Country (OIC) who has implemented Islamic Financial System. It started from the humble beginning in 1963 with the formation of Pilgrimage Fund which is better known as ‘Tabung Haji’, as the first Islamic savings financial institution. The first fully ‘Shariah’ compliant Islamic Bank was established in 1983 with the name of Bank Islam Malaysia. It was followed by the first Takaful or Islamic Insurance Company under the Takaful Act in 1984. Malaysia has become the role model in implementing Islamic Financing and made progress way ahead of some of the countries in Middle East.
The fast growing Islamic Financing demand has triggered the conventional banks in Malaysia to expand their financing offerings and introduced products and services which begin in 1993. The Islamic Banking virtues were spread across the nation and reach all Malaysian irrespective of race and religion.
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