NH-2016-q2

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NEWS NEWHORIZON Shawaal 1437 to Rabi al awwal 1438 Malaysia’s Securities Commission Launched Five-Year Blueprint Malaysia’s Securities Commission (SC) has launched a five-year Islamic Fund and Wealth Management Blueprint to drive further development and growth of Malaysia’s Islamic capital market. Taking into account global trends including the rising affluence in Asia- Pacific and emerging Muslim economies, the Blueprint aims to leverage Malaysia’s well-developed Islamic capital market ecosystem to establish the country as a leading international centre for Islamic fund and wealth management. The initiatives will, among other things, broaden linkages and connectivity, capitalise on global opportunities and increase the value add and talent base within the Islamic capital market to enhance its product and service offerings. SC claim that Malaysia is the world leader in Islamic capital markets with a market size of RM1.7 trillion, which has more than tripled over the last decade. As the only country in the world with a framework for Islamic fund management companies, Malaysia is now home to 20 fullyfledged Islamic fund managers including large international firms. Combined with other fund management companies operating Islamic windows, Malaysia has RM132.4 billion worth of Islamic assets under management, which is among the largest in the world. Malaysia is also a primary marketplace for global sukuk issuance, commanding 54% of outstanding global sukuk. The Blueprint has identified strategies and key initiatives to strengthen Malaysia’s positioning as a global hub for Islamic funds and develop the country as an international provider of Islamic wealth management services. The Blueprint also aims to establish Malaysia as a regional centre for Shari’ah-compliant sustainable and responsible investment (SRI), leveraging Malaysia’s position as the largest SRI market in Asia. To be implemented on a phased approach, initial work programmes arising from the Blueprint recommendations will include the formulation of a framework for SRI funds, the setting up of a global centre for Islamic capital markets and the introduction of a digital investment services framework. Datuk Muhammad Bin Ibrahim, Governor Bank Negara Malaysia, Tan Sri Dato’ Seri Ranjit Ajit Singh, Chairman of Securities Commission Malaysia (SC), Datuk Johari Abdul Ghani, Minister of Finance II, Senator Dato’ Lee Chee Leong, Deputy Minister of Finance II, Zainal Izlan Zainal Abidin, Managing Director, Development & Islamic Markets, SC. 6 IIBI www.islamic-banking.com
NEWHORIZON July – December <strong>2016</strong> NEWS S&P Report Calls for Strengthening of the Shari’ah Governance Framework While acknowledging the work of AAOFI, IFSB and many local jurisdictions to improve Shari’ah governance frameworks, S&P Global Ratings suggest that there is room for The Growth, Stability and Efficiency of Islamic Banking The Dubai Centre for Islamic Banking and Finance (DCIBF), a joint initiative of Hamdan Bin Mohammed Smart University (HBMSU) and the ‘Dubai Islamic Economy Development Centre’, released its second annual report on Islamic economy in early October. The latest report is titled ‘Islamic Banking: Growth, Efficiency and Stability’ and focuses on the efficiency performance of 131 Islamic banks operating globally and other various key facets of Islamic banking. Out of the total Islamic institutions studied, DCIBF’s report reveals that the Kuwait Finance House (KFH) received the highest efficiency score among all banks mentioned in the report, followed by Al Inma Bank from Saudi Arabia, which obtained the top score in terms of the most cost-efficient Islamic bank in the world. The top 20 most efficient Islamic banks come from seven countries, including the UAE, Qatar, Malaysia,and Bahrain in improvement. It suggests that well-defined standards could help to unlock new opportunities for Islamic finance and boost growth. addition to Kuwait and Saudi Arabia. Outside the GCC region only Malaysia made it to the top 20 list. More than 400 Islamic banks and financial institutions are now operating in over 60 countries from different regions, including Europe, Americas, South Asia, Far East, Africa and Australia. The report points out that the growth and competitiveness of Islamic banking are being driven by numerous factors such as size, brand, ability to enter new markets, microfinance, combating poverty, strategic alliances and the development of Islamic finance as an integral part of the global halal economy. Besides the global ranking, the report, which comprises four The report particularly draws attention to the reliance on internal Shari’ah audits to police Shari’ah compliance. (Pakistan and Oman with the requirement for external Shari’ah audits are exceptions to this rule.) Any remedial actions, if any, required by these internal audits are not disclosed. chapters, also studied the current state of the global Islamic financial services industry valued at $2 trillion (US) at the start of 2015. Although it is expected that Islamic banking will continue to grow globally, the report warns that it may face challenges especially in countries that are heavily reliant on oil and other commodity prices. In this regard, diversification of the industry and further expansion is essential for its sustainable growth, the report states. The report also suggests that while the industry remains on a growth trajectory, concentration of Islamic banking assets in few markets, mainly the GCC and the wider MENA region, may pose a threat to the stability of Islamic banking. Professor Nabil Baydoun and Dr Mansoor Al Awar at the Launch of the Islamic Banking; Growth, Stability and Efficiency Report www.islamic-banking.com IIBI 7
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