Opportunity to expand Islamic finance offerings

As international markets are perched precariously on the edge of a global financial abyss, a small window of opportunity has sprung up for Malaysia to spread its Islamic finance wings internationally.


“There is an opportunity now but the window is small,” International Investor country publisher Cory D'Abreo said, an observation seconded by the Global University of Islamic Finance (Inceif) president and chief executive Daud Vicary Abdullah.

“The pendulum of power is swinging towards the east and right now it is in the Middle East. So they are beginning to flex their muscles,” Daud said, adding that before the Middle East took hold of the international Islamic finance, Malaysia should grab the chance to promote its Islamic finance sector globally.

Sharing views at the recent International Investor Islamic Finance Roundtable, he added that the Middle East had an inferiority complex towards the west previously but “that is slowing stripping away as they become more vocal about wanting things done the syariah-compliant way”.

He also said that Malaysians, in turn, had an inferiority complex towards the Middle East when it came to Islamic financial services and products and therefore, were hesitant about venturing beyond local shores.
On the local Islamic finance milestones, Securities Commission Islamic Capital Markets executive director Zainal Izlan Zainal Abidin noted that growth had been fanned by more industry players achieving economies of scale and greater product innovation and development.

“Islamic finance has been growing rapidly (here) in the past two decades but there needs to be another growth driver (to sustain growth momentum). We believe having more syariah-based approach, which means more risk-sharing structure, will propel the growth,” he said.

“The projection for the growth of Islamic capital market (ICM) in Malaysia is 10.6% per year for the next 10 years from the size of about RM1 trillion (valued last year). This would take the value of the Malaysian ICM to almost RM3 trillion,” he said, adding that this would encompass about 60% of the total local capital market.

Zainal added: “From the capital market perspective, we are looking at ways to drive expansion not just through product range but also specificities of the products like having more foreign currency issuance as well as funds in more varied sector funds to cater to a wider audience.” (The Star Online)