Malaysia is stepping up its push to become a world centre of Islamic finance with the release of a Shari'ah Governance Framework for Islamic Financial institutions that will apply to Islamic organisations from June this year.
Development of the framework reflects concerns the trillion dollar Islamic investment sector, estimated to be equivalent to about 5 per cent of the worldwide investment industry, is stalling.
"This framework is a catalyst to bring about progress for the industry and to ensure that syriah institutions are being properly operated by all the parties," Dr Mohd Akram, executive director of the International Shari'ah Research Academy for Islamic Finance told the Malaysian Sinchew news service.
Dr Akram's comments coincide with hundreds of Muslims worldwide this week celebrating the prophet Mohamed's birthday, making it a public holiday in both Malaysia and Indonesia.
Malaysia's courting of the Islamic investment world follows the move last year of their $350 billion Malaysia bourse to partner with the Bahrain bourse in the offering of Islamic investment products.
At $7 billion the Bahrain bourse is a minnow but the strategic significance of the link shouldn't be underplayed particularly given the closer links being forged between ASEAN bourses to synchronise their trading platforms to facilitate cross-border share transactions.
Earlier this month, the Malaysian, Singaporean, Philippine and Thai securities exchanges announced plans to develop a common technology framework that is expected to go live by the end of this year.
A study released by consultant Ernst & Young in 2010 found that the Islamic funds industry may be stagnating because its institutions appear slow to add the sophistication cashed-up Islamic investors are able to get from traditional developed world financial powerhouses.
Raja Teh Maimunah, head of Islamic markets at Bursa Malaysia was reported last year saying this lack of diversification among products available from Islamic financial institutions was a major stumbling block holding back the industry.