A very good afternoon.
Rt Honorable The Lord Mayor Alderman Michael Bear;
Ladies and Gentlemen,
1. Let me first thank the Rt Honorable The Lord Mayor, Alderman Michael Bear, for his kind words of introduction and for inviting me to speak with you today. It is a pleasure to be back in Britain, and to be not just in London but right in the heart of the City – the greatest financial centre in the world.
2. The UK’s relationship with Malaysia stretches back almost as far as the history of Mansion House itself. In 1771, Francis Light was sent by the British firm Jourdain, Sulivan and de Souza to the State of Kedah and trade links were first established. A lot has changed since then… for one thing, Jourdain, Sullivan and de Souza are no longer in business. I guess the demand for opium simply isn’t what it once was!.
3. But today, just as Mansion House continues to stand proud as a symbol of London’s financial might, so the ties between our two countries have endured and flourished. Modern day companies like RBS, HSBC, Standard Chartered and Prudential have taken the place of the old and are now well-established in the Malaysian market, and the opportunities for British business in our country are greater than ever before.
Ladies and Gentlemen,
4. London has of course been at the epicentre of the growth in financial services over the last decade – an unprecedented period of wealth generation that has seen the City become home to more than 500 banks and the world’s largest foreign exchange market, as well as a leading trader in energy futures and insurance. For our part, Malaysia has emerged as the world leader in Islamic finance, with an Islamic capital market that is already worth £220 billion and that is set to triple in value over the next ten years.
5. But while it might be unfair, and inaccurate, to declare the good times over, we find ourselves today on a somewhat different path – a period of reflection, of taking stock, and of figuring out how, where we have failed, or can we do things better in the future.
6. As an economist myself, I have no desire to indulge in the unfortunate banker-bashing that we have seen so much of over the last few years.
7. So whether we are talking Eurobonds or Sukuk bonds, all of us here today are on the same side – the side of rising living standards, increasing prosperity and sustainable, long-term economic growth. But as the world continues its steep climb back out of recession, there is no doubt there are many questions that we need to ask and answer: questions about responsibility, accountability, transparency and limits.
Ladies and Gentlemen,
8. There has been a lot of talk about morality in the financial markets since the global crash, but for Muslims the idea that markets should be moral is one that has always been a given. A key element of Islamic finance is the prohibition of the acquisition of wealth based solely on risk or on playing the odds – and over the last few years, when I think it’s fair to say the world has woken up to risk, Islamic finance has shown that it can be a serious economic force not by taking bigger risks but by taking far, far fewer and supported by instruments that are asset backed.
9. This area, Islamic finance, is just one example of Malaysia’s expertise but I think it is a good one – because in our interdependent global economy investors shouldn’t just be considering new markets but new industries as well. And the potential for growth here is simply huge.
10. In the UK alone there are more than one and a half million Muslims – enough people to fill a city the size of Sheffield three times over – and all of them need bank accounts, home insurance, savings and investment products. Worldwide, that figure rises to more than one and a half billion, outnumbering the population of India, of China even. A block this size has phenomenal economic power – the international halal meat industry alone is worth £380 billion, three times the value of BP.
11. Already a US$1 trillion dollar industry, Islamic finance should no longer be seen as on the fringes of the global financial system. There are more than 600 Islamic financial institutions operating in over 75 countries, including 22 right here in the UK. In addition, the sukuk market, for example, has become a highly competitive fundraising option for large scale projects and infrastructure development. With an annual growth of 40 per cent, sukuk instruments are fast emerging as an attractive new asset class for investors, while evolving to become a preferred financing and capital raising option for issuers.
12. So I am pleased that here in Britain interest in Islamic finance is growing all the time. I know the Henley Business School now offers courses, and just last week the University of Durham announced plans for a new Centre of Islamic Economics and Finance. I was also delighted to learn that Richard Thomas, the CEO of Gatehouse Bank, became the first person to receive an OBE for civic excellence in the UK Islamic Finance Industry when he was named in the Queen’s Birthday Honours List earlier this year – a significant achievement and one for which I offer my warmest congratulations.
13. Here in Britain, the efforts of the coalition Government to facilitate the range and choice of Islamic financial instruments on offer, and to create a regulatory regime in which the industry can thrive, should be applauded. And in Malaysia, financial institutions like Friends Provident have already established a successful presence in our takaful market through joint-ventures with local partners. I hope to see even greater participation from the UK financial community in the months and years ahead, particularly in cross-border fundraising and wealth management activities.
14. Our regulatory framework is very attractive to foreign corporates seeking to issue sukuk out of Malaysia – and this approach isn’t just confined to Islamic finance. I am determined to do everything I can to make it easier for investors to get involved in all of the investment opportunities we have to offer – enhancing the delivery of government services, sweeping away red tape and catalysing bold, far-reaching reforms.
15. Because open, transparent, even-handed economic stewardship has always been our hallmark in Malaysia. That is what matters to business, that is what matters to me, and that is why I have put in place a number of plans to map the nation’s path through the next decade and to build the momentum for growth.
Ladies and Gentlemen,
16. The New Economic Model will deliver real action to raise the role of the private sector and make Malaysia an even more attractive proposition for global investors. It will remove barriers to investment and enhance incentives. It will increase competition and improve the business environment. And, crucially, it will rebalance the roles of the public and private sectors – because in the modern world the role of government must be to support business, not stifle it. We must stand behind you, not stand in your way.
17. So I urge you: come to our country. See for yourself in bricks and mortar and steel and glass how the Government’s programmes and policies are transforming Malaysia day by day. Experience our fast-growing infrastructure, our vibrant economy and our progressive, modern outlook.
18. I know that your Prime Minister, David Cameron, has urged the City to engage with emerging markets, and I would certainly add my voice to his today. You might say that I’m biased, but with a growth rate of 7.2% in 2010 and a target to achieve an average growth of 6% per year until 2020, I believe Malaysia is well on track. I hope you will decide to get in on the action and that we will see you in our country very soon!.