The introduction of Islamic finance in Malaysia Islamic Banking Industry Islamic banking refers to a banking system based on Islamic

law , also known as Sharia law . The basic principles governing Islamic banking is the sharing of risks and profits between the two parties , security and justice for all transactions conducted are based on business activity or asset. These principles are supported by the core values of Islamic banking activities that cultivate entrepreneurship, business and trade and bring societal development or benefits. Activities that involve interest (riba), gambling ( maisir ) and speculative transactions (gharar ) is prohibited . With the use of various Islamic financial concepts such as Ijarah (leasing) , mudharabah (profit sharing) and musyarakah ( partnership ) , financial institutions have the flexibility , creativity and many more options in creating Islamic financial products . Moreover, by emphasizing the need for transactions to be supported by activities related to trade or business , Islamic banking set higher standards for investment and promote accountability and greater risk reduction . Islamic finance has grown tremendously since it was first performed in 1970. Global Islamic banking assets and assets under management in Islamic finance has now reached USD750 billion and expected to reach U.S. $ 1 trillion in 2010.1 Now, there are more than 300 Islamic financial institutions in 75 countries around the world . The Asian Banker Research Group, the 100 largest Islamic banks in the world have an annual asset growth rate of 26.7 % 2 and the global Islamic finance industry average growth of 1520 % per tahun.3 Islamic finance industry in Malaysia has been operating for more than 30 years ago . Drafting of the Islamic Banking Act 1983 enabled the Bank first established and subsequently more Islamic financial institutions have been established in the country following the liberalization of the Islamic financial system . Malaysia's success in the domestic Islamic finance industry in more than 30 years has provided a solid foundation for the country - a solid foundation of financial stability that adds to the richness , diversity and maturity of the financial system. At present, Malaysia's Islamic banking assets reached USD65.6 billion with an average growth rate of 18-20 % per tahun.4 Currently , Islamic finance is growing rapidly in Malaysia , supported by a conducive environment that is known for continuous product innovation, the wide range of Islamic investment instruments, comprehensive financial infrastructure and adopt best practices, regulatory and global law . Malaysia has also placed a strong emphasis on the development of human capital in the development of the Islamic finance industry to ensure the availability of skilled manpower in the sector. All this value proposition has transformed Malaysia into one of the market 's most advanced Islamic banking in the world. diversity of financial institutions Rapid liberalization of the Islamic financial industry , as well as the ease of doing business

environment has encouraged foreign financial institutions in Malaysia's Islamic banking business . This has created a community of local and international financial institutions are diverse and growing . Currently, Malaysia has a large number of full-fledged Islamic bank , including foreignowned entities ; conventional institutions that have established Islamic subsidiaries and entities that do business in foreign currency. All financial institutions authorized to do business in ringgit and non-ringgit . Malaysia continues to thrive and will develop this industry with foreign financial institutions to establish an international Islamic banking business in Malaysia to undertake foreign currency business .