Country Economic Work for Malaysia - Islamic Development Bank

More documents

Recommendations

Info

For example, International Centre for Education in Islamic Finance (INCEIF), Islamic Banking Institute of Malaysia (IBFIM), and International Shariah Research Academy for Islamic Finance (ISRA) were established for this purpose. In addition, various higher learning institutions are also offering under-graduate and post-graduate programs in finance with specialization in Islamic finance. Government Strategy for the Islamic Finance 125. The Government of Malaysia (GoM) has been quite supportive of the Islamic finance industry. Separate laws for Islamic banks and Takaful operators were promulgated in as early as 1983 and 1984, respectively. Dedicated Shariah Advisory Councils, which act as the highest authority to advise and determine Shariah resolutions, were formed at financial regulatory bodies namely Bank Negara Malaysia, Securities Commission and Labuan Financial Services Authority. The country’s judiciary has also strengthened with the introduction of a dedicated High Court which is presided by Shariah conversant judge to deal with Islamic finance cases. Since 2001, regulatory bodies in Malaysia (BNM, Securities Commission and Labuan Financial Services Authority) have been actively providing capacity building programs on Islamic banking regulation and supervision to other central banks. In 2006, Malaysia Islamic Finance Centre (MIFC) was launched with the aim to develop Malaysia as the global hub for Islamic finance in the following four key areas: (i) Islamic capital market – instruments and players for international business; (ii) banking and re- Takaful; (iii) talent development; and (iv) professional service providers. In order to enable comprehensive human development in the area of Islamic finance, the country has established an endowment fund named “Fund for Shariah Scholars in Islamic Finance” worth $62.5 million. Diversity of International and Domestic Financial Institutions 126. Malaysia has diverse and growing number of domestic and international financial institutions. Malaysia's diversity of market intermediaries consists of commercial and investment banks, local and foreign Islamic banks, international Islamic banks, Takaful and re-Takaful operators, brokers and fund managers. These institutions include Islamic subsidiaries and also entities undertaking international currency business (ICBU). Many of Malaysian Islamic financial institutions have participated in Malaysia's several notable achievements such as record-setting Sukuk issuances and various product innovations. With Malaysian Islamic financial institutions extensive experience and pioneering many innovative products, these institutions have gained mileage in terms of track record. By leveraging on the inherent strengths of Malaysia's intermediaries, the issuers may able to benefit from cost competitive issuances and facilitative process. The reputation of these intermediaries adds further credibility to the issuance. This is also attributed to their rich experience in using various Islamic principles or a combination of principles to produce innovative Islamic banking, Takaful and Islamic Capital Market (ICM) offerings. Facilitative Islamic Finance Environment in Malaysia 127. Malaysia provides a facilitative environment for Islamic finance industry, which has enabled efficient delivery channels for the proliferation of foreign Islamic finance 57
institutions as well as Islamic products and services. This applies to the banking and Takaful sectors as well as the ICM industry. In particular, Malaysia provides a facilitative framework for Sukuk issuance for local and international issuers. In addition to issuing ringgit denominated Sukuk, the current framework allows issuers to also issue a non-ringgit based Sukuk with ready approval based on the following criteria: For issuance of Ringgit denominated Sukuk: ‣ Deemed approval granted to sovereigns, quasi-sovereigns, multilateral development banks (MDBs) and multilateral financial institutions (MFIs) rated "AAA" ‣ 14 working days to foreign multi-national corporations (MNCs) and foreign corporations For issuance of non-ringgit denominated Sukuk: ‣ Deemed approval granted to sovereigns, quasi-sovereigns, MDBs and MFIs rated “BBB” on foreign rating scale ‣ Governing laws of Malaysia, England or United States may be used for bond documentation For both ringgit and non-ringgit denominated Sukuk: ‣ Both resident and non-resident issuers are free to utilise proceeds from the issuance onshore and offshore ‣ The issuers are also free to hedge upto full amount of the underlying commitment 128. Malaysia's facilitative environment also encompasses a sound infrastructure platform, consisting of the Electronic Trading Platform (ETP) and the Real-time Electronic Transfer of Funds and Securities (RENTAS) system. Both systems allow for an efficient trading of bonds, with a high level of post-trade transparency and market liquidity. For global investments, flexibility is also accorded for foreign investors to leverage on international clearing and settlement systems. The presence of an active secondary market also attracts more investors, who are encouraged by the choice of either holding Sukuk investments until maturity or to sell Sukuk prior to maturity. This creates a more vibrant trading activity which, in turn, expands the depth and liquidity of the Sukuk market. Malaysia’s Central Strategic Location for Islamic Financial Hub 129. Malaysia's strategic location enables the country to serve as a link between the East and West - positioning it ideally to facilitate cross flow of funds and greater economic linkages between South East Asia and the Middle East. As the economies of these regions continue expanding, Malaysia is expected to play a pivotal role as a regional Islamic financial hub in these regions, particularly for transnational investments and the sourcing of funds. Through its various global economic inter-linkages, Malaysia provides access to financial pipelines to tap surplus funds, the wealth of high net worth investors and the largely untapped opportunities of these fast growing markets. 58
Page 4:
Acknowledgements Appreciation for s
Page 7 and 8:
ISRA : International Shari’ah Res
Page 9 and 10:
(v) Foreign Direct Investment……
Page 11 and 12:
(2005)), key insights emerged in tw
Page 13 and 14:
drain. Further, the Government need
Page 15 and 16: macroeconomic indicators are given
Page 17 and 18: SMEs are concentrated in the servic
Page 19 and 20: easy technology adoption, pro-busin
Page 21 and 22: Kelantan with the lowest per capita
Page 23 and 24: Figure 1.12. General Growth Diagnos
Page 25 and 26: that the Government’s Economic Tr
Page 27 and 28: (ii) Low Returns to Investments app
Page 29 and 30: Figure 1.22. Malaysia's Exports by
Page 31 and 32: 43. Malaysia’s private firms are
Page 33 and 34: over the medium-term. Several initi
Page 35 and 36: growth software compared to its maj
Page 37 and 38: esearchers and technicians in R&D p
Page 39 and 40: 59. Malaysia can further enhance it
Page 41 and 42: Annex Table 1.2. Malaysia: MDGs Ach
Page 43 and 44: 64. The Malaysian experience has al
Page 45 and 46: economic growth. The ETP is expecte
Page 47 and 48: 77. According to the Global Competi
Page 49 and 50: development of infrastructure throu
Page 51 and 52: a. Northern Corridor Economic Regio
Page 53 and 54: The challenge is for financial inst
Page 55 and 56: Original Equipment Manufacturing (O
Page 57 and 58: Intensify formalisation to promote
Page 59 and 60: Sukuk market has experienced unprec
Page 61 and 62: For innovation to become an importa
Page 63 and 64: y the United States (MYR2.3 billion
Page 65: (vi) (vii) Sharing Eexperience and
Page 69 and 70: Liberal Foreign Exchange Administra
Page 71 and 72: Issues/Challenges Facing the Islami
Page 73 and 74: Funding from Government of Malaysia
Page 75 and 76: programmes in the country. Initiati
Page 77 and 78: labeling and branding of Halal prod
Page 79 and 80: to over 200 industrial estates or p
Page 81 and 82: member countries can be provided te
Page 83 and 84: Figure 6.5: MATRADE Business Strate
Page 85 and 86: offered by the 35 MTCP training ins
Page 87 and 88: case of the economies in transition
Page 89 and 90: Key Challenges Facing the MTCP
Page 91: iii. Conclusion 185. Above diagnost
show all

Country Economic Work for Malaysia - Islamic Development Bank

Create successful ePaper yourself

Delete template?

Save as template?