Muhammad bin Ibrahim: Reflections on Malaysia's advancing Islamic finance industry Welcoming remarks by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Shariah Advisory Council (SAC) 20-Year Anniversary Dinner, Kuala Lumpur, 12 December 2017. * * * Welcome to the 20th Anniversary Dinner of the Shariah Advisory Council of Bank Negara Malaysia, or in short the SAC. On behalf of Bank Negara Malaysia and the audience here, we would like to express our utmost gratitude to His Royal Highness Sultan of Perak Darul Ridzuan and Her Royal Highness for gracing tonight’s dinner. This event is a special occasion. Gathered here tonight are a coterie of intellectuals who help shape the development of Islamic finance in Malaysia. The SAC, in its 20-year history, has established itself as the foremost institution in developing and expanding the tenets of Shariah for Islamic finance. I would like to take the opportunity to express our heartfelt thanks to the distinguished members of the SAC – past and present – for their contributions to the advancement of the Islamic Finance industry in Malaysia. As we reflect on the journey of the SAC, I reminisce of the great Shariah scholars from the glory days of Islam. Islamic civilisation during this era flourished upon a strong foundation of knowledge, wisdom and tolerance by its leaders and scholars. While consensus building was a key part of the culture, differing views, conclusions and preferences helped unite, rather than divide.
More importantly, while EMEs accounted for about 55% of global GDP since 2009, their contribution to global economic growth was as high as 80%. So, a slowdown in EMEs will be an impediment to recovery in the US and other advanced economies. 15. Fifthly, zero interest rates and QE have indirectly widened the income gap. Because of ultra-low interest rates and excess liquidity seeking better returns, stock and property markets rallied in many parts of the world. This is especially true in places with more promising growth prospects like Mainland China, Hong Kong and Singapore. However, lowincome groups, with little if any stocks and properties, have missed out altogether. And their savings in deposit accounts have earned next to nothing. This has exacerbated inequality, resulting in negative implications for social stability and harmony. 16. Sixthly, zero interest rates and QE have changed the global investment environment. Yields on the traditionally more conservative bonds and fixed income investments have declined. For example, 10-year US Treasuries’ yield has fallen from 5% to about 2%, and some sovereign bond yields in the Eurozone have even plunged into the negative. At the same time, both the exchange rates and bond prices in EMEs have experienced sharp swings recently. With the soon-to-start normalisation of US interest rates, and distorting low-returns and high-volatility in the bond markets, the investment environment will become even more complex and difficult. 17.