Seize opportunity in new growth areas, Islamic finance players told

by KEVIN WONG / pic by TMR filepic

Local Islamic finance players should look and leverage into new growth areas as Malaysia maintains its status as a global leader in the industry.

Second Deputy Finance Minister Datuk Lee Chee Leong (picture) said Islamic finance’s reach and influence have expanded beyond traditional Islamic markets, as well as increasing its strong footholds within the banking, takaful and capital markets.

“Domestically, our achievements have placed the Malaysian Islamic finance industry at the forefront. Islamic finance continues to grow, but as it matures and enters the mainstream, the days of double-digit annual growth are now behind us,” he said.

“Beyond headline numbers, the industry must now seize opportunities in new growth areas; reinforce the core strengths of Islamic finance; unlock its potential; and realise its intended promises,” Lee said during the recent launch of Orix Leasing Malaysia Bhd’s Shariah compliance products.

He said based on the Islamic Financial Services Industry Stability Report 2017, Islamic banking has experienced an increase in domestic market shares in 18 countries, while remaining constant in eight others.

“Within our shores, progress has been made at many fronts. The Islamic banking share of assets has quadrupled from 7.1% in 2001 to 28% in 2016. Takaful penetration now stands at 14.6% of the population,” Lee said, adding that Malaysia’s presence within the global Islamic finance system has largely made its mark on the global sukuk market.

Additionally, the country has sustained its position as the market leader with a market share of more than 50% over the last decade.

Malaysia is currently the largest sukuk market globally with 50.7% share of global sukuk outstanding; of which 48.2% of it is corporate sukuk.

Islamic finance, he said, has also provided a viable mean of mobilising funds for investment and financing in conformity with Shariah requirements.

Additionally, the universal characteristics of Islamic finance have not only drawn participation from the Muslim community, but also attracted the participation of non-Muslims due to its principles of equity.

“Its profit and risk sharing between providers and recipients of funds, as well as the socially responsible financing, were what drew customers in,” he said.

“Even though we have witnessed Islamic finance’s increasing recognition and widespread appreciation, it still needs a great impact to reach its potential to provide solutions to problems faced by the society,” he said.

The government, Lee said, will be promoting the growth of Islamic financing in the country with the aim to retain its position as the global leader in the industry.