One way to enhance the relationship between the UK and Malaysia, is according to Assistant Governor of the Central Bank of Malaysia, Bakarudin Ishak, is via “Islamic finance.” Two years ago, the Islamic Financial Services Act (IFSA) was put in place to “provide for a comprehensive regulation and supervision of Islamic financial sector in compliance with Shariah.”
At that time, when Hugo Swire, the UK’s then Foreign Minister visited Malaysia, it was suggested that there were three principal reasons the two regions have good relationships: a) close business ties, b) shared history and c) strength of the education links.
A few months later the then-PM of Malaysia, Prim Datuk Seri Najib Razak echoed this sentiment when he mentioned David Cameron’s “high regard for Malaysian achievements.” Ultimately it is hoped that by next year, bilateral trade will be increased to RM26 billion.
So today, the idea is that Islamic financing facilities will do that. One example is the Battersea Power Station Phase 3 Project in London, costing £467 million. In addition, with the IFSA, Islamic banks can “develop a wider range of products to meet investor risk-return preferences where the return to the investor will be more directly linked with the performance of the deposit fund. The financing extend beyond debt-based to include equity-based financing. This effort will further promote economic growth by broadening the financial intermediary role of Islamic banks.”