The growth of the ASEAN economies is no longer only export driven but for several years now has been driven by a growing domestic economy. In this current environment, most ASEAN economies have been adversely affected by the spill over effects of the global financial crisis. Sharp declines in export earnings are being experienced. The economies of ASEAN and greater Asia, however, have the potential to strengthen further their domestic economies. Indeed, in doing so this would contribute towards reducing further the global imbalances. In addition, being diverse economies we are also able to take advantage of the complementarities that exists in the region. This is reflected in the increased intra-regional trade and intra-regional investment flows. Intra-regional trade as a ratio of total trade of the region has increased from 30% in 1990 to 40% in 2007. Intra-regional investment flows now account for 12% of the region's foreign direct investment. With a total population of 575 million, ASEAN also has greater potential to increase its economic interface with the larger economies in greater Asia. The current financial crisis is expected to accelerate the financial and economic integration in Asia. This should be viewed positively, not only towards the unwinding of the global imbalances, but also because this has the potential to contribute towards global growth. The banking sector in ASEAN and the greater Asian region will have an important role in facilitating this trend.
Liquidity management in the Islamic financial system and the institutional arrangements for resolution are among the other areas that need further development. Of critical importance is for the board and management of Islamic financial institutions to institute higher standard of leadership and a comprehensive governance culture and framework. Mutual recognition in Shariah and human capital challenges On this occasion, I would like to touch on two areas confronting Islamic finance firstly on, the issue of mutual recognition in Shariah and secondly the human capital development in the industry. Malaysia takes cognisance of the diversity of Shariah views within the region and among jurisdictions. Although Islam welcomes diversity of views, there is also a need to promote greater harmonisation among jurisdictions on the specific issues relating to Islamic finance. Such convergence is important for the long-term sustainability of the sector. Malaysia has taken the initiative to organise Regional Shariah Scholars Dialogue in 2006 and 2008 as part of the efforts to foster greater engagement among the Shariah scholars in the region. Indonesia has been active in these dialogues. Moving forward, the newly established International Shariah Research Academy (ISRA) has been entrusted to intensify the regional Shariah Dialogues as well as to enhance further the international engagement among Shariah scholars in our pursuit for Shariah harmonisation. Most encouraging is the greater appreciation and understanding that has been achieved in these deliberations of the Shariah practices that are peculiar to the respective jurisdictions.