The solid growth of the Islamic financial industry in the past few years has been underpinned by several factors, including improvements in regulatory clarity,
supportive demographic factors and product innovation. Indeed, from a USD0.8bln industry in 20091, assets in Islamic finance grew to nearly USD2tln in 20142 . Of these, 79% of assets are in the Islamic banking sector, while sukuk accounted for a 16% share.
Notably, non-OIC countries such as the US, Hong Kong and Luxembourg have also shown increased interest in Islamic finance, as these countries has issued debut sukuk in 2014. In addition to industry developments, growth in the past few years have been accompanied by evolving regulations, especially in key
Islamic finance jurisdictions. For example, Malaysia has enacted its Islamic Financial Services Act (IFSA) 2013. IFSA significantly strengthens the legal foundations that support a comprehensive regulatory and supervisory framework for Islamic finance and reflect international standards for effective supervisory systems. Elsewhere, several jurisdictions such as the UAE and Indonesia5 are in the midst of centralising Shariah functions in the industry.
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com