The Association of Islamic Banking Malaysia (AIBIM) and Indonesian Syariah Banking Association (ASBISINDO) need to set up an industry task force on joint development of cross-border Islamic liquidity management products suitable for both Malaysia and Indonesia.
In a joint statement today, the associations said this was decided at one of the specialised workshops held in conjunction with the Joint High Level Conference in Islamic Finance, organised by Bank Negara Malaysia and Bank Indonesia in Jakarta last week.
It said the second workshop on "Product development and innovation towards sustainability of Islamic finance industry" concluded that viable opportunities in Islamic finance existed, particularly in Islamic structured products as well as syariah-compliant remittances, cross-border electronic payment facilities and foreign exchange risk management instruments.
"This is where market players in Indonesia and Malaysia can collaborate towards increasing cross-border flows and at the same time better manage the risk exposures towards sustainability of the industry," it said.
The statement said the third workshop, entitled "Creating an Enabling Environment for Islamic Finance focusing on the STAR principles (Syariah, Tax, Accounting and Regulatory), concluded that syariah in Islamic finance was a dynamic process where mutual recognition and acceptance of interpretation would accelerate the pace of internationalisation.
It said these workshops were mainly participated by industry players and market experts, including members from AIBIM and ASBISINDO as well as PwC and Zaid Ibrahim & Co from both countries.
The statement said both countries aimed to converge with International Financial Reporting Standards by 2012 and Islamic financial institutions were no exception.
"The accounting practitioners from Indonesia and Malaysia have exchanged views on current accounting standardisation issues in Islamic finance," it said.
It said legal practitioners had examined practical issues that needed to be addressed, including areas for improvement and the idea of a Syariah Financial Centre in Indonesia was discussed and well-received.
AIBIM and ASBISINDO expected these workshops would be the first step of a more focused initiative to link the Islamic financial industries in Malaysia and Indonesia.