DATUK Seri Najib Razak on Tuesday called on Muslim countries to develop a revolutionary method in Islamic finance for entrepreneurs and financiers that would leverage each other’s strength and contribute to sustainable economic growth.
The prime minister said although barriers to development and prosperity remained, the Islamic world in general had made remarkable progress with Organisation of the Islamic Cooperation (OIC) member countries becoming a significant group in the global economy.
Najib said the total gross domestic product of OIC countries had jumped from US$7.5 trillion (RM24.5 trillion) in 2008 to US$9.4 trillion in 2012, according to last year’s report by the Statistical Economic and Social Research and Training Centre for Islamic Countries.
“Looking at these numbers, the potential for our Muslim brothers is limitless. This is why we need to continuously explore working together to find new approaches and challenge ourselves with new ways of thinking,” he said in his keynote address at the Association of National Development Finance Institutions in Member Countries of the Islamic Development Bank (Adfimi) — SME Bank International Forum 2014, here.
He said many Muslim countries had transformed into hubs and sources of wealth in areas including logistics, oil and gas, services and Islamic finance.
“The Muslim world, through organisations such as Adfimi, must continue to emphasise that the Islamic nations are peaceful and a source of prosperity for the world. Our potential is enormous if we organise and get our act together.”
Najib said as an Islamic finance pioneer, Malaysia should play an influential role in ensuring the future development of the sector.
He said Islamic finance was growing 50 per cent faster than conventional banking, with the market expected to rise to US$2.5 trillion by 2017 from US$$1.2 trillion.
He added that the financial transformation in the Muslim world provided huge opportunities for entrepreneurs and small and medium enterprises (SMEs).
“Within associations such as Adfimi, we must create a working platform to collaborate, share experiences and facilitate cross-border economic activities.”
However, regulatory hurdles, lack of consumer education and the need for more business-friendly policies are among the issues that need to be tackled.
Najib said Malaysia aimed to increase the macroeconomic contribution of SMEs to 41 per cent of the GDP, 62 per cent of employment and 25 per cent of exports by 2020, and expressed optimism that the targets could be achieved.
The country is now ranked 12th most competitive out of 60 economies by the Institute of Management Development.
“These rankings show that our economic transformation policies are delivering results and opening up new opportunities for Malaysia’s SMEs. But more needs to be done.”
Last year, he said RM12 billion was spent on 157 SME development programmes to support nearly 890,000 projects. This year, the amount rose to RM13 billion, with almost half coming from the private sector.
Also present at the forum were Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz, Khazanah Nasional Bhd deputy chairman Tan Sri Nor Mohamed Yakcop, SME Bank Group managing director Datuk Mohd Radzif Mohd Yunus, and Adfimi chairman Mehmet Emin Ozcan.