Malaysia, Japan to Enhance Cooperation in Islamic Finance

Malaysia and Japan will enhance their cooperation in areas such as Islamic finance. Malaysian Prime Minister Najib Razak, who wrapped up his three-day visit to Japan, is supporting Japan’s foray into the Islamic market.

Many Japanese businesses are eager to learn and see how they can gain a piece of the pie in the growing market.

Mr Najib on Tuesday gave a keynote speech at the round table meeting of the World Islamic Economic Forum (WIEF) Foundation and Alliance Forum Foundation (AFF) in Tokyo - a forum to help link Japan and the Muslim world.

During his visit to Japan, he reached an agreement with his counterpart Shinzo Abe to enhance cooperation in areas such as the halal food industry and Islamic finance.

“We discussed the support from the Japanese government, and its authorities to encourage Japanese enterprises, financial institutions, and investors to engage in Islamic finance-related activities with Malaysia. We in turn will offer technical assistance to Japan in this field,” Mr Najib said.

Japan is still new to businesses catering to Muslims. Restaurants could well be the most advanced in this area, as more outlets in Japan try to offer halal cuisine to the growing number of Muslim tourists, particularly from Malaysia and Indonesia.

Several Japanese banks have also introduced Islamic finance, but the understanding of business opportunities catering to Muslims is still limited.

Katsuya Hisamichi, corporate officer at Rohto Pharmaceutical's R&D Department, said: “Actually, the Muslim world is quite a new field for us. We haven't had any experience with Muslim countries."

Some companies in the financial sector have had more experience.

Nobuaki Kurumatani, deputy president and board member at Sumitomo Mitsui Banking Corporation, said: “Our Islamic finance activities started in 2008 from SMBC Europe that covered Middle-East countries. We are now focusing on Asia. I think the two big markets still are growing, and the most promising next step is focusing on the African market.”

The Islamic economy is expected to grow at double digits for the next few years. Global Islamic finance is estimated at US$2 trillion, while the halal market is worth around US$2.3 trillion.

The medical industry is hoping to tap on the Muslim market too. “Shortage of donor in any country has caused problems in heart transplantation. Also it's very expensive. Almost all countries desire to start stem cell therapy,” said Yoshiki Sawa, Dean at the Osaka University Graduate School of Medicine.

With better cooperation, Malaysia hopes to help Japanese companies, academics, and physicians gain the skills for them to participate actively in the Islamic market.