Operational Aspects of Pt Bank Muamalat Indonesia as an International Islamic Bank in Malaysia

Topics: Bank, Islamic banking, Fractional-reserve banking Pages: 21 (6490 words) Published: June 10, 2013
OPERATIONAL ASPECTS OF PT BANK MUAMALAT INDONESIA AS AN INTERNATIONAL ISLAMIC BANK IN MALAYSIA MOHD FODLI HAMZAH (Student ID: 0700539)
PT BANK MUAMALAT INDONESIA, KUALA LUMPUR BRANCH

20th SEPTEMBER 2012

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Abstract
Among the Malaysia key Islamic Financial initiatives are the issuance of new license to foreign interest within the domestic Islamic financial institutions as well as International Islamic Banks and Takaful operators. The objectives are to establish Malaysia as a leading international and regional hub of Islamic finance in the Asian Region. Pt Bank Muamalat Indonesia is one of the foreign Islamic Bank established as a branch operating under the MIFC initiatives. Among the International Islamic Banks in Malaysia, Pt Bank Muamalat Indonesia Kuala Lumpur Branch is the only international Bank that actively involved in full banking business activities particularly in corporate, treasury and retail banking. As a branch the bank need to adhere to the regulation imposed by Central Bank of Indonesia as well as Malaysia particularly in banking regulation and Shariah aspects. The paper discusses the challenges and the opportunity faced by the bank in managing their banking operations. The paper also discusses about some strategic operational planning undertake by the bank to grab the business opportunity locally as well as regionally. It was proven with substantial growth since inception whereby the bank managed to register financial breakeven only in the 11th month of its operation. The author foresee the establishment of BMIKL gives a better impact to the growth of Islamic financial industry in Malaysia particularly in providing wide range of international banking facilities in international currencies other than Ringgit Malaysia with residents and non-residents. Besides that BMIKL play an important role to harmonize the Shariah matters between Malaysia and Indonesia.

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1.

Introduction

Malaysia's long track record of building a successful domestic Islamic financial industry of over 30 years gives the country a solid foundation to have a rapid growth in Islamic finance Industry. On average the industry growth rate is 18-20% annually whereby according to Asia Banker Research Group, the global Islamic finance industry is experiencing average growth of 15-20% annually1. It shows the growth of the industry is on the right track. According to Bank Negara Malaysia as at 2007 the assets of Malaysia’s Islamic Banking has reached USD65.6 billion2. The rapid growth of the industry was strongly supported by the conducive environment that is renowned for continuous product innovation, a diversity of financial institutions from across the world, a broad range of innovative Islamic investment instruments, a comprehensive financial infrastructure and adopting global regulatory and legal best practices. In addition the Malaysian government placed a strong emphasis to on human capital development to ensure the sufficient and availability of Islamic finance talent. All these factors have transformed Malaysia into one of the most developed Islamic banking industry in the world. Under the Islamic finance Industry liberalization program, Malaysia has invited the foreign financial institutions to establish their Islamic banking business either in Ringgit or non-Ringgit currency. In 2011, Malaysia has 16 full-fledged Islamic bank including 6 foreign owned3. In August 2006, the Malaysia International Islamic Financial Centre (MIFC) initiative was launched to position Malaysia as a hub for international Islamic finance. The MIFC initiative comprises a community network of the country's financial and market regulators, including Bank 1

Mckinsey, The World Islamic Banking Competitiveness Report 2007-08, Capturing The Trillion Dollar Opportunity 2

www.bnm.gov.my Ibid

3

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Negara Malaysia (Central Bank of Malaysia), Securities Commission Malaysia, Labuan Financial Services Authority and Bursa Malaysia...

References: Mckinsey,(2007-08), Capturing The Trillion Dollar Opportunity, The World Islamic Banking Competitiveness Report M.Suyanto (2009), The Performance Of Bank Muamalat Indonesia During 2000-2004 : An Exploratory Study, STMIK Amikom Yogyakarta Islamic Banking and Takaful Department, Guidelines on International Islamic Bank, Bank Negara Malaysia, BNM/RH/GL/002-9 Ahmadfathi (2008) , International Finance: Analysis On Myr Bank Indonesia (2005), Peraturan Bank Indonesia Nombor 7/1/PBI/2005 Tentang Pinjaman Luara negeri Bank KashifHasan Khan, A Critical Review Of Shari’ah Supervision On Current Financial Transactions, JamiaMilliaIslamia University, New Delhi, India Muhamad Nadratuzzaman (2012) Comparative analysis of islamic banking products between Malaysia and Indonesia, Islamic University of Jakarta, International Journal of Academic Research in Economics and Management Sciences April 2012, Vol. 1, No. 2 ISSN: 2226-3624 ) Asyraf Wajdi Dusuki , Commodity Murabahah Programme (CMP): An Innovative Approach to Liquidity Management, International Islamic University Malaysia. CFO Innovation Asia Staff (2012) Sovereign Risk for Malaysia Improves; India and Indonesia Deteriorate, http://www.cfoinnovation.com PT Bank Muamalat Indonesia, Tbk, 2011 Annual Report www.bnm.gov,my
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