MALAYSIA must leverage on its solid headstart over the past 40 years to maintain its status as the “mecca” of Islamic banking and finance market, industry experts said.
Any complacency, they added, may allow other Islamic banking hubs such as the United Arab Emirates and Bahrain as well as aspirants like Singapore and Hong Kong to close the gap or overtake the country.
They also said Muslim and non-Muslim countries increasingly refer to Malaysia as a role model in the governance of Islamic banking and finance.
Bank Negara Malaysia deputy governor Datuk Mohd Razif Abdul Kadir said going forward, the country’s leadership status would hinge on its ability to build on the momentum achieved so far.
This will require local industry players particularly to be more creative and innovative with their offerings, Razif said at the New Straits Times roundtable discussion in Kuala Lumpur on Thursday.
The discussion on “Malaysia as the Hub for Islamic Finance: Overcoming Challenges, Enhancing Strengths” was jointly organised with Affin Islamic Bank Bhd, a subsidiary of Affin Bank Bhd.
Other panelists were Institute of Strategic and International Studies (Isis) chairman Tan Sri Mohamed Jawhar Hassan,
The International Centre for Education in Islamic Finance (Inceif) president and chief executive officer Datuk Agil Natt, Affin Islamic chief executive officer Kamarul Ariffin Mohd Jamil.
And International Shariah Research Academy for Islamic Finance (Isra) head of research affairs Associate Professor Dr Asyraf Wajdi Dasuki.
It was moderated by The New Straits Times Press (M) Bhd group managing editor Datuk Zainul Arifin Mohamed Isa.
Razif pointed that Malaysia is home to the largest Islamic banking assets with the current value of US$86 billion, ahead of the UAE’s US$84 billion (RM267.96 billion) and Bahrain’s US$46 billion (RM146.7 billion).
In terms of Islamic fund managers, the country has the most number with 152 firms, again ahead of the United Arab Emirates (23) and Bahrain (17).
The 152 firms in Malaysia manage a total of US$6.5 billion (RM20.7 billion) of funds, compared with US$1.05 billion (RM3.35 billion) in Bahrain and US$522 million (RM1.6 billion) in the United Arab Emirates.
Malaysia is also the leading financial centre when it comes to the sukuk’s number and value, Razif said.
At US$67 billion (RM214 billion) from 1,080 issuances, the country accounted for 63 per cent of the global sukuk issued since 2006.
This is by far more than the United Arab Emirates, which had a total value of US$14.57 billion (RM46.47billion) from 12 issuances over the same period.
Malaysia also hosts 53 of the industry’s top Islamic financial institutions, behind only to Bahrain with 66 Islamic financial institutions but ahead of the United Arab Emirates with 44 Islamic financial institutions.
Isis’ Mohamed Jawhar said the country must attract more international financial institutions to set their regional Islamic finance hub here to preserve the leadership status.
He said Malaysia can further tap opportunities from the estimated 1.4 billion to 1.6 billion Muslim population worldwide including some 200 million in Southeast Asia alone.
This can partially be done by introducing innovative products that are not copycat of those of the conventional banking.
Affin Islamic’s Kamarul said the onus is on the local players to enhance their Islamic banking products and services, taking advantage of the solid framework built by Malaysian regulators over the years.
“When you look at the present state of our Islamic banks, they are just focusing on purely financing,” he said.
Isra’s Asyraf said continued efforts to conform and align the Islamic structures and products in line with the syariah principles and international practices are critical too.
He said in Islamic banking, 80 per cent of discussion about a contract covers sales-based, lease-based and partnership profit sharing, among others.
“These are among the tools to generate income and profits, which require the innovation and change of mindset of the players in the industry.
“We cannot think like a normal banker. If we want to reap the full benefits of Islamic finance, we have to explore all of the products available, which have been in Islam for more than 1,400 years,” Asyraf added.
Inceif’s Agil felt that the country must continue to focus on human capital development and training for pratictioners in order to keep the momentum of Islamic finance in general.
It is also pertinent to promote global exchange of knowledge, ideas, capabilities and resources in the industry.
The panelists pointed that the collapse of state-owned developer Nakheel and subsequently Dubai’s property market had nothing to do with Islamic finance.
Razif said some people had been twisting facts to put the blame of the collapse on the shariah issues.
“There is a lot of misperceptions on what happened to Dubai. What happened there is a credit risk issue.
“Just because Nakheel’s sukuk went into default, it has nothing to do with sukuk.
“In fact the syariah principles can further strengthen (an economy) because Islamic banks finance real economic activities and not give speculative financing,” he added.
source : btimes.my
