Speech by Tun Musa Hitam at The 8th WIEF Roundtable


May  20th



“Transforming Islamic Finance in Turkey: Promise of Growth”

MAY 20, 2014

Mr Nail Olpak, President of MUSIAD,

Distinguished Guests,

Ladies and Gentlemen,

Assalamualaikum warahmatullahi wabarakatuh and a very good morning.

At the outset let me, on behalf of the Patron of the WIEF and Prime Minister of Malaysia, members of the WIEF International Advisory Panel (IAP) and Secretariat as well as all participants of this 8th WIEF Roundtable gathered here this morning, convey our most profound sadness and sympathies to the Government and people of Turkey for the coal mine tragedy that occurred in Soma, western Turkey on 14 May last week.

Our deepest condolences go to members of the family of those miners who have lost their lives arising from the tragic incident. May Allah swt bless the soul of all those miners involved.

Ladies and Gentlemen,

I am delighted indeed to be back in Istanbul again this week after spending my holiday in this beautiful city recently together with my family!

I must say that Istanbul has grown to be one of my favorite cities and for which I will always look forward to making a visit!

Let me now on behalf of the WIEF Foundation; thank our partner, MUSIAD, for agreeing to jointly organise this 8th WIEF Roundtable in Istanbul again, the second to be held in Turkey.

It is significant that this Roundtable is held here in conjunction with the Meeting of the IAP of the WIEF.

We deeply value the cooperation and hospitality extended by MUSIAD to the WIEF and my sincere appreciation goes to all those involved in working hard to ensure the success of this Roundtable.

Ladies and Gentlemen,

In close consultation with MUSIAD, we have chosen ” Transforming Islamic Finance in Turkey: Promise of Growth ” as the topic for this Roundtable.

I must say that the choice of this topic is a reflection of our common desire to promote and expand the development of Islamic Finance globally with special emphasis in key Muslim countries, in keeping with the national aspiration of the governments concerned. The 17.6% annual growth of Islamic finance globally over the last four years is a measure of the increasing awareness and significance of Islamic Finance in shaping the international financial landscape.

As the world’s 17th largest economy and with a predominantly Muslim population of 76 million, Turkey is certainly well placed to be an important hub in Islamic Finance.

I understand that in 2013, the assets of Islamic Banks or what are locally known as  participation Banks, have reached USD 36 billion, representing a 5% share of total banking assets in Turkey. This was a 25% growth from 2012, compared to 13% attained by Turkey’s conventional banks.

A recent Thomson Reuters study estimates that the assets of participation banks in Turkey could reach between USD 80 billion-USD 120 billion by 2017, on track to meet the Government target of 15 % by 2030.

I also note that the World Bank and Turkish Treasury would be setting up a Global Islamic Finance Development Center and that an Islamic Finance Research Facility would be established at the Istanbul Stock Exchange.

All these augur well for Turkey. The potential for the growth of Islamic Finance in Turkey is no doubt huge. And Turkey’s unique status as a Rapid-Growth Market together with its inclusion as part of a fraternity of QISMUT (Qatar, Indonesia, Saudi Arabia, Malaysia, United Arab Emirates, Turkey) to provide the next big wave in Islamic Finance would put it in a good stead to be one of the leading global players in this field.

But striving to expand Islamic banking services nationally and globally for any Muslim country is not without challenges.

The development of a comprehensive regulatory framework, the provision of education for consumers especially for a growing young population, the continued training required for practitioners of financial institutions, the development of new and commercially attractive Islamic banking products including the issuance of attractive sovereign Sukuks, the limited number of Islamic financial institutions available even in Muslim countries and the ability to capitalise on mobile banking in an increasingly sophisticated technological society represent some of the major challenges that need to be collectively addressed if the systemic growth and development of Islamic Banking is to be promoted.

I believe that the role of Governments and regulatory authorities is extremely important in achieving such objective. But public-private collaboration is equally crucial. A positive response by Governments to create a more conducive environment to facilitate the opening of more foreign Islamic Financial institutions in addition to their own for example, would go a long way towards promoting the growth of such institutions.

I believe that all these have been and would be given due consideration by Turkey in striving to transform Islamic Finance in the country. Your ideal geographical location in being close to the major financial centers of Europe would allow Turkey to play a prominent role as a major Sukuk market player as well as in influencing the development of Islamic Finance in the region.

Ladies and Gentlemen,

As is well appreciated, several aspects of Islamic Finance have continued to occupy the minds and attention of policy makers and practitioners of Islamic Finance. Different countries have different peculiarities in developing their respective Shariah compliant Islamic financial system. But one major point that is attracting a lot of debate lately is the need to establish a clear linkage between the application and practice of Islamic Finance with social justice. This is significant as failure to do so would make it less meaningful to those looking for equitable access to Islamic Finance facilities and to the overall national objective of narrowing the economic gap between the haves and the have not.

I am glad that we have been able to assemble here an impressive list of experts to speak and share their knowledge on Islamic Finance at the Roundtable. We look forward to a highly interactive dialogue not merely as an academic and intellectual exercise but as a contribution to the conceptual development of Islamic Finance that would find practical application at the national level.

I am also glad to note that business participants gathered here would be taking advantage of their attendance at the Roundtable to engage with the relevant Turkish authorities and financial institutions to explore new opportunities for collaboration in the field of Islamic Finance. We sincerely applaud such noble initiatives and hope that their discussions would bear fruit as a tangible indirect outcome of this Roundtable.

Ladies and Gentlemen,

The global picture affecting the Muslim world today leaves much to be desired. Developing, expanding and transforming Islamic Finance is merely one of the many challenges that we need to address together. I fully appreciate that one Roundtable alone could only have a marginal impact in the context of the numerous discussions taking place at different levels on the subject. But to the extent that we are able to even initiate the holding of this Roundtable and to assemble together a group of participants passionate enough in promoting the gradual recognition and acceptance of Islamic Finance globally, we should be more than contented that we have at least done our part, however small.

With these few words, let me end by once again thanking all those present at the Roundtable and by wishing all participants every success in your deliberations.

Wabillahitaufik walhidayah wassalamualaikum warahmatullahitaala wabarakatuh