TRX to become the Islamic Wall Street? - IFN

TRX to become the Islamic Wall Street?

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MALAYSIA: Islamic financial business will form the heart of the Tun Razak Exchange (TRX) project due to be completed in 2017, with some experts calculating that Shariah compliant transactions could account for up to half of the business that will go through the new center. RAM Ratings Services expects the real value-added of Malaysia's financial services sub-sector to expand between 6-7% annually over the next decade, and according to the agency: “We view the TRX, which will provide world-class infrastructures and facilities, to be a key driver of the above GDP trend growth envisaged for the financial services sub-sector." Formerly known as the KL International Financial District, TRX is a RM26 billion (US$8.12 billion), 70-acre development including office buildings, retail and entertainment space, residential components, a park and a business university. Along with its neighboring sister residential project, Bandar Malaysia, it is expected to transform the face of Kuala Lumpur and provide a significant boost to the city’s property market as well as attracting international business. The project is being co-developed by the Malaysian government's special purpose vehicle 1MDB and Abu Dhabi's Mubadala Group. Azmar Talib, CEO of 1MDB, commented this week that Islamic banking comprises about a quarter of Malaysia's financial market in terms of assets and financing, but this is expected to reach 40% by 2020, when TRX will be well developed. “We intend to use Malaysia's strengths, particularly in Islamic finance, to provide the infrastructure that will enable innovation, attract skilled talents and promote ease of doing business," he said. Malaysia has been growing its financial services sector for the past two decades, but despite its acknowledged global leadership in Islamic finance it still lags behind its two big regional competitors, Singapore and Hong Kong, in terms of the overall financial market. Questions arise as to whether Kuala Lumpur has the potential to carve a place for itself as a global financial marketplace and what role Islamic finance could play in helping it to do so. According to Dr Yeah Kim Leng, the chief economist at RAM: "With the country's early mover advantage in Islamic finance, TRX could fulfill its aspirations of becoming, if not a global Islamic financial center, then a thriving regional center for Islamic financial services serving the ASEAN Economic Community."