Malaysia is fast becoming the world's most innovative country in the area of Islamic financing. Malaysia's central bank governor recently described the strides made by the country's financial sector in a recent speech carried by the Bank for International Settlements.
Despite these recent successes in the financial sector, small Malaysian firms have not regained their pre-Asian crisis levels of energy, a recent IMF study shows. The study finds that low profitability and financing constraints are two reasons Malaysian firms have failed to reclaim their lead as the source of Malaysia's growth before the Asian crises of the 1990s.
Whether the new Islamic financial instruments will attract foreign investors from Asia and the Gulf states and help re-energize the local financial markets and businesses remains to be seen.
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