CONTINUOUS efforts were taken to further position Malaysia as the leader in Islamic finance as Islamic finance continued to gain significant importance in the global financial market.
These included a recent review of laws relating to land, hire purchase and contract applicable to Islamic finance by the Law Harmonisation Committee to ensure their compatibility with Shariah and proposed amendments to the legislation to facilitate Islamic finance transactions. On the international front, global engagement and alliances in Islamic finance continued to be fostered in the first seven months of 2012.
The International Centre for Education in Islamic Finance has signed MoUs with the World Bank and the Islamic Financial Services Board in efforts to enhance collaboration on sharing of knowledge, undertaking research, development, training, and education in the Islamic financial services industry.
The Islamic capital market has contributed significantly to the development of the overall capital market and remains as important alternative source for raising capital. As at end-July 2012, 825 Shariah-compliant securities were listed on Bursa Malaysia, representing 89% of total listed securities with a market capitalisation of RM931bil or 65% or total market capitalisation.
In the first seven months of 2012, the trading volume of shariah-compliant securities increased to 148.4 billion units of the total 222.2 billion units traded.
Malaysia remains on the forefront of innovation and development of sukuk and continues to be the global leader in the sukuk market, accounting for 68% of total global sukuk outstanding as at July 31.
Malaysia retained its number one position for issuing sukuk, with a market share of 71% as at end-July. Bursa Malaysia remains the top sukuk listing destination, with 19 sukuk listed totalling RM99.6bil as at July 31.
During the first seven months of 2012, two Islamic fund management licences were approved, bringing the number of full-fledged Islamic fund management companies to 18. During the same period, an additional Islamic unit trust fund and four Islamic unit trust and four Islamic wholesale funds were launched.
As at end-July, the total net assets value (NAV) of Islamic unit trust funds stood at RM33bil and the Islamic wholesale funds at RM14bil.
Meanwhile, the number of Islamic REITs stood at three, with a market capitalisation of RM3.6bil as at end-July. Similarly, the Islamic ETF remained at one with total NAV of RM300mil.
Bursa Suq Al-Sila’ being the world’s first end-to-end Shariah-compliant commodity trading platform, has added Refined, Bleached and Deodorised palm olein as new commodity offering to meet greater demand from local and international players for commodity-based Islamic financing and investment.
Meanwhile, the Islamic banking business continued to expand in the first seven months of 2012.
Total assets grew 20.6% to RM469.5bil as at end July, representing 24.2% of the total banking system assets.
Total deposits rose 21.3% to RM362.7bil, or 26.1% as at end-July.
Total Islamic financing continued to grow 19.3% to RM294.2bil and accounted for 26.6% of total loans by the banking system.
Financing of the Islamic banking system was predominantly channeled to the household sector and accounted for 65%, or RM191.1bil as at end-July.
The takaful industry expanded further during the first seven months of 2012, with assets increasing to RM18.3bil and accounting for 9% of the total insurance and takaful industry assets as at end-July.
The bulk of takaful assets were concentrated in Islamic debt securities and Government Investment Issues, which amounted to 74.4% of total takaful assets.
(The Star Online / 28 Sep 2012)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com