SINGAPORE: Singapore and Malaysia should look for more cross-border opportunities to collaborate on Islamic financing.
This is according to speakers at the inaugural Islamic Finance Services Conference on Tuesday.
Experts said Singapore should also widen its breadth of Islamic finance products to cover the areas of retail, real estate and equities, in order to spur growth in this area.
Malaysia is the world leader in terms of Islamic financing, making up about 30 per cent of the more than US$1 trillion worth of global assets in Islamic finance.
As for Singapore, the growth momentum in Islamic financing continued unabated even when certain tax incentives expired earlier this year.
In Budget 2013, the Singapore Government said it will tax Islamic finance business at the standard 12 per cent rate instead of 5 per cent, the current rate, when the incentive expires on March 31.
Nazmi Camalxaman, associate director of Group Islamic Banking at CIMB, said: "I think Singapore has a lot of potential, especially in terms of Islamic asset management. It is untapped in Singapore. So I think if Singapore plays its cards right and chooses the products and services wisely, it will become a strong player in terms of asset management."
CIMB Singapore has secured about S$400 million worth of Islamic commercial and corporate banking deals this year.
This is almost three times the amount of Shariah-compliant deals the bank transacted last year.
Experts said Singapore must continue to play to its strengths.
Zainul Abidin Rasheed, advisor of the Middle East Business Group at the Singapore Business Federation, said: "Singapore does not have to emulate the kind of moves that Malaysia has because Singapore by itself is a very strong financial sector and we have our own strengths, but there is still room for us to see how we can best tap the growing market in terms of finance, whether from Southeast Asia or the Middle East."
Other ASEAN players are also keen to tap into that growth.
Ariff Sultan, regional director (Asia) at Ideal ratings, said: "Governments and the exchanges have worked together in trying to find a more sustainable growth of Islamic finance in ASEAN.
"There is a common working platform that ASEAN exchanges are coming together to be able to inter-trade within ASEAN and in that space, both also looking at creating Shariah-compliant equities."
Other analysts are anticipating the likes of Singapore, Thailand and Indonesia pushing out such Islamic equities through the ASEAN exchanges platform in the near future.
(Channel News Asia / 01 Oct 2013)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com