Islamic Financial Services
From The Report: Malaysia 2014
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As a result of government promotion, increased interest among Muslims and non-Muslims, heightened awareness of the benefits of Islamic finance and improved regulation, sharia-compliant financial products have been gaining on conventional finance. The country’s IFS sector dates back to 1969, when the government established the Pilgrims Management and Fund Board to help Malaysians pay for the Hajj. According to recent estimates, around half of all outstanding debt securities are sharia compliant, with the annual trading volume of the IFS market reaching $312.1bn. The 2013 Islamic Financial Services Act will improve regulation and supervision in the sector by giving the central bank the power to intervene in financial institutions’ operations if it feels they are endangering the financial system. The IFS sector will no doubt continue to expand rapidly. Regulation may create new challenges for some business in the sector, but it will also increase confidence in and understanding of IFS. Once the sector digests these new rules, it will likely come back stronger and in a better position to take on a larger share of conventional financial services. This chapter contains interviews with Rauf Rashid, Country Managing Partner, EY Malaysia; and Daud Vicary Abdullah, President and CEO, INCEIF.

Articles from this Chapter

Overview

Regulating success: Recent reforms will provide the sector with the support it needs
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The Islamic financial services (IFS) sector has been growing rapidly in Malaysia in recent years. As a result of government promotion, increased interest among both Muslims and non-Muslims, heightened awareness of the benefits of Islamic finance and improved regulation, sharia-compliant financial products have been gaining on conventional finance. According to the IMF, Islamic capital markets in Malaysia tripled in size between 2000 and 2010; at the end of 2010, the fund says more than half the country’s…

Interview

OBG talks to Daud Vicary Abdullah, President & CEO, INCEIF
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Interview:Daud Vicary Abdullah What role will cross-border collaboration play in helping align local and international requirements of Islamic financial services (IFS) institutions? DUAD VICARY ABDULLAH: Where IFS is today was unimaginable three years ago. That said, we must remember that the $1.6trn of Islamic assets still accounts for less than 1% of the global total. The owners of the other 99% are controlling assets that are non-Islamic. We as IFS institutions thus have a growing global…

Analysis

Centre of attention: The sector has its eyes set on a bigger share of the global market
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The country has long sought to become a global leader in Islamic finance services (IFS), and it has built up its sector to encourage international transactions and foreign investment and participation. While it has always been ranked highly in terms of business, it has generally been viewed more as a local market and less of an international nexus. Malaysia now hopes to put that image behind it and become known the primary hub for sharia-compliant transactions worldwide. The numbers indicate that…