Moderator Abdulkader Thomas began the first day with a brief opening address on the current global economy which could worsen and that, he said, would be part of the discussion in many of the sessions for the three-day forum.

Abdulkader then started the session by asking Musa Abdul Malek about the present market scenario in the regional market and how well the regional market will hold up and the perspectives facing Malaysia from a global viewpoint. Musa replied that the market is basically seeing inflationary pressure as a result of the rising cost of energy and food inflation which affected supply and demand.

Another issue that has an impact on the economy is export growth. Musa expressed concern over the signs of declining demand from the US and Europe, adding that demand from the US had fallen from 9.7% in the first quarter to 8.9% in the second quarter of 2008.

Abdulkader then asked Surachet Chaipatamanont for his views on the emergence of the proposed Islamic financial hub in Singapore and Hong Kong and how they could increase business for the Malaysian market space. Surachet said in the context of the development of Islamic finance and expanding the agenda onto the global stage, he sees interest coming from Hong Kong, Singapore and the Middle East as complementary which will further develop Malaysia.

Surachet believed the Malaysian brain drain was due to leadership issues and the appeal of some other markets. He said Malaysia would slightly suffer in the short term with the outflow of talent in the first couple of years but that hopefully, continuous efforts by regulators will reverse the flow of interest from foreign players and those talents will make their way back to Malaysia.

Abdulkader then asked Jamelah Jamaluddin for her opinion on the performance of Islamic finance in Malaysia and how it would hold up in 2009 amid the current market scenario. Jamelah said Malaysia is not spared from the current scenario around the world.

However, one of the reasons Malaysia attracts international issuers is because of the facilitative regulations it offers.

In response to Abdulkader’s question if he had difficulty in marketing Malaysia with the facilities and what should be done to improve the situation, Badlisyah Abdul Ghani said it is reasonably easy to market Malaysia overseas, as the Malaysian products, particularly most of the Sukuk that were structured overseas, originated from the domestic market. Malaysian products are marketable but need a little bit of fine-tuning in order to meet the requirements of the local market.

Abdulkader then asked Mohd Effendi Abdullah what needs to be done to enhance Malaysia’s presence in the global market space. Effendi said Malaysia had reached a stage where it must grow externally. The achievement in Sukuk is the track record to go abroad in the global area because Malaysia is already a hub.

Abdulkader then asked the panelists to comment on whether the substantial impairment worth about US$500 billion overseas represents a threat or opportunity in the Islamic market space, especially in Malaysia.

Jamelah said the situation could be an opportunity for Islamic finance to grow. Firstly, the conventional banks were holding substantial assets and this was an opportunity for Islamic banks to get hold of these.

Secondly, a lot of Islamic funds in the past were invested in conventional banks and investment banks that are now suffering. Hence, it was a good opportunity to sell Malaysian products to the investors as we can derive better yield for them at this point in time.

Thirdly, there is growing awareness among international investors of the growth of Islamic finance. Malaysia should seize this opportunity as there is strong demand now.

Badlisyah said the big western banks are focusing much of their efforts on trying to put their house in order. He said CIMB is taking the opportunity to grow further, making its platform right before the big boys are back in the market. Musa wrapped up the session by saying that there might be opportunities for Malaysia, but that there is still a negative appetite in the initial stages for investors to really take these opportunities to the next phase.