KL the centre of Islamic finance, The Economist says
Play
Malaysia is the world's most important Islamic-finance centre, although the richer Gulf states and Saudi Arabia have bigger Islamic banks and Indonesia the largest Muslim population, says financial news magazine The Economist.
Malaysia also dominates the global market for sukuk, or Islamic bonds, the magazine said in an article headlined “Banking on the ummah: Malaysia leads the charge in Islamic finance”, in its latest issue out last Saturday.
“Leadership in financial services is not an obvious one. Yet, in some ways the country is the world’s most important Islamic-finance centre,” the mag said.
“Just over a fifth of the country’s banking system, by assets, is Syariah-compliant; the average for Muslim countries is more like 12 per cent, and often a lot less,” it added.
On the Islamic bonds, the magazine said the country issued the world’s first sovereign sukuk in 2002 and in the first three quarters of 2012, it was responsible for almost three-quarters of total global issuance.
It said Malaysia was home to the Islamic Financial Services Board, an international standard-setting body. “These are big achievements for a relatively small country of just 30 million people, of whom only about 60 per cent are Muslims. In neighbouring Indonesia, which is home to the largest Muslim population in the world, only about 4 per cent of the financial sector is Syariah-compliant.
“Although the much richer Gulf states and Saudi Arabia have bigger Islamic banks, it is Malaysia that is the centre for thought leadership in Islamic finance,” said the magazine, quoting Dubai’s Fajr Capital fund founder and CEO Iqbal Khan.
Malaysia’s Muslim heritage, outward-looking nature and links with financial hubs like Britain and Singapore made the place a natural candidate to bridge the worlds of religion and capitalism, it said. The central bank was also supportive.
The International Centre for Education in Islamic Finance (INCEIF) and the Islamic Banking and Finance Institute of Malaysia (IBFIM), both set up by the central bank, contributed to Malaysia's pre-eminence in the field. INCEIF, set up in 2005 and boasting about 2,000 students, is the world’s leading university for the study of Islamic finance. The International Syariah Research Academy, housed within INCEIF, has brought scholars to produce an internationally acceptable rule-book for Islamic finance.
The IBFIM concentrates on vocational training, offering a variety of certificates in Islamic finance as well as acts as a consultancy.
