Cementing Malaysia's position as Islamic financial hub (by IFN)

MALAYSIA: The government and the central bank, Bank Negara Malaysia (BNM), have launched the Financial Sector Blueprint 2011-2020 in a further effort to transform Malaysia's financial sector and economy; and cement the country's position as a global hub for Islamic finance.

The plan projects that Islamic financing will account for 40% of the country's total financing in 2020 from 29% in 2010. It also seeks to create a domestic system conducive for increasing international financial flows and hence, increase the internationalization of Islamic finance.

Among efforts identified to achieve this is the positioning of Malaysia; including the Labuan International Business and Financial Center, as a global re-Takaful hub.
The blueprint has also called for the presence of more diverse players in the local Islamic finance industry to aid the development of a wider range of products and services, with BNM to issue new Islamic banking and Takaful license only to institutions with specialized expertise.

Malaysia will allow foreign banks to own bigger stakes in local lenders, grant more licenses and loosen short-selling rules, seeking to triple its financial sector by the end of this decade, the central bank said.
In addition, the plan recommends the issuance of more Sukuk from the government and government-linked companies to improve the development of a benchmark yield curve and increase the country's issuer base. Other recommendations include the establishment of global alliances in Islamic finance.

Other initiatives under the plan include the development of Malaysia as a global platform for the listing and trading of Shariah compliant asset classes; in an effort to maximize the country's potential as an international Islamic financial market. This will be achieved by collaborating with other regulatory agencies.
The blueprint also calls for the establishment of alliances with commodity exchanges in other jurisdictions and the identification of different types of commodities to be used as underlying assets.

SEE IFN NEWS.