چكيده فارسي :
The development of Islamic finance can be traced back to the establishment of the first Islamic bank in Malaysia in 1983. This paper explores the pertinent phases in the development of Islamic banking in Malaysia including its future path in the coming decades. References will be made to the initiatives of the public and private sectors in contributing to the development of Islamic banking industry. Coupled with the background of an open economy, opportunities for cross fertilisation have enabled the restructuring of the Islamic banking industry to meet the challenges of global competition.
With intensifying globalisation and the fast pace of reengineering of banking services, the role of the government in influencing change and transformation of Islamic banking is expected to be focussed more on facilitating than directing, which is indicative of the continuous learning and evolutionary approach of the Malaysian political economy. However, the future is not necessarily an extension of the past. In the light of this scenario, it is therefore incumbent upon the industry and its players to consider their role in the unchartered terrain of the future environment. The significance of Islamic banking and finance as a catalyst to Islamic economic growth needs to be reviewed in terms of its alignment to the objective of the Shariah in promoting citizenship, participation and social justice.
The first phase was characterised by an emerging Islamic banking business avoiding interest by using trade-based and lease-based financing. It started with the setting up of the monopolistic Bank Islam Malaysia in the first decade, followed by the setting up of new players in the second decade to prepare for the development of the Malaysian banking industry. This was a period of confidence building where legal and regulatory institutions had to provide the support and supervision for the growth of Islamic banking business especially among the Muslim population.
During the second phase, Shari’ah and prudential standards were developed to achieve holistic growth of the institutions. Human capital development was also given emphasis to provide relevant competencies and skills in various aspects of Islamic banking services. Industry supporting institutions such Islamic money market using Islamic government certificates were promoted during this phase.
The third phase is ongoing and it is focussed more on inculcating governance best practices as well as preparing the banking industry for international markets. An equally important goal is to rebrand Islamic banking and finance as a viable and ethical alternative to conventional banking. However, the inexorable technology revolution and the rise of digital interactions and applications are transforming the business of banking, including Islamic banking. It is in this phase that the spirit of entrepreneurship and leadership are expected to promote Islamic banking that will have a positive impact on Islamic society in sustainable ways.
