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Introduction
Malaysia established the first Islamic bank in 1983 with the formation of Bank Islam Malaysia Berhad (BIMB). As any other banks in Malaysia, the Central Bank of Malaysia (also known as Bank Negara Malaysia) governs the operation of Islamic banks; the Islamic Banking Act 1983 covers the jurisdiction ([2] Central Bank of Malaysia, n.d.). The operation of the Islamic banking system is parallel with the conventional system. This means that the government allows the Islamic banks to compete with conventional banks without favoring either.
BIMB was the only bank that provided Islamic banking services until 1993 when the government allowed all conventional banks to offer Islamic banking services, or more widely known as the Islamic banking window. The window was called an interest-free banking scheme. Subsequently, the government introduced the second Islamic bank, Bank Muamalat Malaysia Berhad in 1999. With the opening up of the financial market, the Malaysian government has allowed foreign banks to open Islamic banking services since 2004. Three financial institutions from the Middle East have opened up their offices in Malaysia - Kuwait Finance House from Kuwait, al-Rajhi Banking and Investment from Saudi Arabia and Asian Finance Bank from Qatar. Moreover, the government has permitted five local conventional banks to offer full-fledged Islamic banking services from their own subsidiaries since 2005.
In summary, the development of Islamic banking in Malaysia has grown from strength to strength despite having a dual-banking system where the conventional banking system is operating side by side with the Islamic banking system. Eventually, the products offered by the Islamic banking system have to compete with those of the conventional banking system. This paper will re-evaluate the progress and achievements of Islamic banking in Malaysia, particularly in the area of sales and marketing of Islamic banking services.
Islamic banking
Islamic banking refers to a system of banking or banking activity that is consistent with the Principles of Islamic Law (Syariah) . Syariah prohibits the practice of giving or accepting additional money for money that is borrowed. In other words, Syariah bans interest charged on loans, regardless of the quantum of the interest. Furthermore, the types of businesses must also comply with the principles of Islam. For example, the business should not be involved directly or indirectly...