Malaysia has the capacity to retain its leadership in global Islamic finance despite the emergence of competition from centres such as Hong Kong and Dubai, CIMB Islamic chief executive officer Badlisyah Abdul Ghani said.
He said despite the stiff competition that Malaysia was facing, it was way ahead of other countries in terms of product offerings and its sophistication, having been developing the market for the last 40 years.
Britain, Singapore, Dubai have recently joined the race to offer Islamic banking and investment products to investors, each vying to become the international hub for Islamic finance. Japan recently also expressed interest in launching a government sukuk.
In October, Hong Kong chief executive Donald Tsang had said the city would emulate Malaysia and Singapore as a centre for Islamic finance, in an effort to grab a slice of the thriving market.
It is believed that Hong Kong will be the biggest beneficiary being the gateway to the sought-after market in China.
Badlisyah said, however, the rise of new Islamic markets did not signify that Malaysia would be at the losing end.
“The launch of the Malaysian International Islamic Financial Centre (MIFC) encapsulates all the competitive edge Malaysia has in the Islamic financial market into one brand entity.
“MIFC is second to none as a global hub for Islamic finance as it is still the only country in the world that has the most comprehensive regulatory, legal and Syariah framework for the business. All these other financial centres are effectively new kids on the block,” he told The Edge Financial Daily in an email interview recently.
Badlisyah said: “There is a lot of development being reported on Islamic finance in Hong Kong and Singapore. However, it is still early days for them. Providing double stamp duty exemptions, as being done in the UK, and allowing Murabahah in Singapore is very good progress, but still insufficient to facilitate a robust Islamic finance industry.”
He said Malaysia boasted some of the largest Islamic financial instruments globally, besides being the largest sukuk issuer in the world. Malaysia retains the world’s largest Islamic bond market, accounting for about US$47 billion (RM157.54 billion), representing two-thirds of total Islamic bonds outstanding worldwide.
“The Islamic banking sector in Malaysia is the largest in Asia, and remains the only one in the world that has an active and effective Islamic money market.
“Bursa Malaysia is the largest Islamic stock exchange in the world, with about 86% of shares listed being Syariah-compliant stocks,” he said, adding that Malaysia also had the largest takaful market globally, in which, the biggest Takaful operators were Malaysians.
He, however, said Malaysia needed to develop and grow its brand, to keep its competitiveness as a pioneer and leader in Islamic finance.
“Malaysia needs to continuously and effectively market itself as the hub for investment flows from the Middle East to the Far East, (as it) is the epicentre of the Old Silk Route, and now for the New Silk Route,” he said. Badlisyah added that Malaysia needed to develop MIFC as a global brand.
Additionally, Badlisyah said a lot more needed to be done as Islamic finance had much potential that was still untapped. He said: “There is room for a lot of financial centres in the global Islamic financial market, just as the conventional market has many financial centres.”
“As a global player in the Islamic financial market, we are excited with the advent of the UK, Hong Kong and Singapore as effective financial centres or platforms in undertaking Islamic banking and finance. We hope they would become as successful as Malaysia so that the market can grow globally,” he added.