Islamic Financial Services
From The Report: Malaysia 2012
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Malaysia’s pioneering role in the development of Islamic finance has made it a clear leader in this field, even as oil-rich Gulf countries show increasing interest in sharia-compliant finance. It is the world’s largest sukuk market – a fact underscored by the record $9.9bn offering by highway operator PLUS in January 2012 – and the second-largest takaful market. The industry has been helped by substantial government support, including low taxes on dividends and several sharia-compliant funds for SMEs and entrepreneurs that are financed by the state. The challenge for the sector moving forward is to standardise and internationalise its products, defining clearly the requirements for sharia products and harmonising its offerings with those of other nations like Qatar.

Articles from this Chapter

Overview

A pioneer in its field: Local Islamic banks are gaining ground in the global arena
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After more than a decade of coordinated effort between the government, financial authorities and private sector players, Malaysia’s Islamic finance services (IFS) sector now boasts the world’s largest sukuk (Islamic bond) market, second-largest takaful ( sharia-compliant insurance) market and a major Islamic banking and securities industry. IFS is a major employer, contributor to value added and flag bearer for the country in international markets. Malaysia has also established itself as…

Analysis

Sukuk champion: Favourable environment attracts issuers
OBG
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With more than 60% of global sukuk issuances taking place in Malaysia – and around 70% of the country’s domestic debt issuances now in the form of these Islamic bonds – these days, Kuala Lumpur can rightly claim to be the global capital of sukuk. This status looks set to continue too, with the government firmly backing market expansion, both via provisions in the Financial Sector Blueprint (FSB) and projects outlined in the country’s Economic Transformation Programme (ETP). Meanwhile,…

Analysis

Continued support: Plans and programmes strengthen sector prospects
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A major reason for the success of the Islamic finance services (IFS) sector in Malaysia has been the sustained support it has been receiving from the government and the financial sector authorities. This support has included the creation of a comprehensive legal framework for the sector, the provision of education and training, and a raft of incentives and programmes. The political and financial authorities have taken a major role in the creation of a complete ecosystem for Islamic finance. KEY…

Analysis

Lending a hand: The budget provides further support for SMEs
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One of the main provisions of the government’s 2012 budget was the establishment of the RM2bn ($645.2m) Sharia-compliant Small and Medium-sized Enterprises (SMEs) Financing Scheme (SSFS). In October 2011 the government also launched the RM500m ($161.3m) Sharia-compliant Commercialisation Innovation Fund (CIF). These initiatives should have positive implications not only for businesses, but also for a range of the country’s Islamic banks. SMALL BEGINNINGS: According to statistics from SME…