Malaysia set to attract more demand for sukuk

BERNAMA (21 February  2019)

KUALA LUMPUR: Being the world’s biggest sukuk issuer, Malaysia is set to attract more demand for shariah-compliant bond worldwide via an initiative taken by the Qatar Financial Centre (QFC) to serve the US$2 trillion global Islamic finance market, said the Bond and Sukuk Information Exchange (BIX Malaysia).

BIX manager Ahmad Al Izham Izadin said there were huge opportunities for Malaysia to leverage this ambitious plan, serving not just Muslim countries but also non-Muslim countries seeking Islamic financing.

“By having this alliance too, other countries can actually take advantage of the demand from investors in Malaysia.

“(And) at the same time, we can also have more options by having other countries joining us in terms of investments… But, of course, we have to be careful of the currency,” he told Bernama on the sidelines of the Second Islamic Fintech Dialogue 2019 (IFD2019), here today.

In December last year, Qatar announced its initiative with Malaysia and Turkey to serve the global Islamic finance market from hubs in the three countries using common platforms and technology as it moved away its high dependence on the oil and gas sector.

Under the plan, QFC chief executive officer Yousef Mohamed Al Jaida was reported as saying that “Turkey would cover Islamic finance needs in Europe, Qatar would serve the greater Middle East and Malaysia would sell to Asia”.

As one of the leaders in the world’s biggest sukuk issuers, Malaysia commanded about 34 per cent of the global market as at 2018.

Echoing the QFC’s initiative, International Shari’ah Research Academy for Islamic Finance (ISRA) executive director Prof Dr Mohammad Akram Laldin said Malaysia was of the same view.

“Malaysia supports the initiative to have common standards with other financial hubs to instil confidence in Islamic finance. We need to be more committed to forge the standards in legality, taxation and governance of Islamic finance with as many nations,” he said.

Mohammad Akram highlighted that as at 2018, Malaysia remained one of the world’s biggest issuers of sukuk, or Shariah-compliant bonds, amounting to RM112.4 billion, adding that the value represented a third of the global market.

He recalled that Bank Negara Malaysia signed a memorandum of understanding with the regulatory authorities of Qatar and Dubai in 2007 to promote mutual cooperation.

Meanwhile Ahmad Al Izham, who was one of the panellists during a dialogue titled “Compete or collaborate”, said that there were not enough competition in the Malaysian business landscape to disrupt and making it more vibrant and promote a healthy competition.

“If you look at businesses abroad, there are so many startups coming in into the country to disrupt businesses, but not in Asia and Malaysia.

“There are some successful cases like Grab and this is the kind of disruption that we need to do in fintech,” he added.

The second edition of IFD2019 today saw the launch of the Finterra Waqf Chain, the first and only platform in the world that has specifically developed a blockchain-based solution to crowdfund waqf charity, Islamic investments and peer-to-peer lending.

Themed “Providing FinTech Insights to the Disruptors and the Disrupted”, the two-day conference focused on the mechanisms and instruments that were in place to support Islamic FinTech development and create new opportunities in the overall development of Islamic finance. — Bernama

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