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MALAYSIA: Market players
are strengthening their focus on Asia as the region is exhibiting greater
potential for Islamic finance driven by a stronger push for ethical finance
by various governments in the region against the backdrop of rising living
standards and a growing population, said industry captains at the IFN Asia
Forum 2015 Issuers Day.
Held yesterday the 25th May at Kuala Lumpur Convention Center,
the two-day forum kicked off on a high note welcoming over 600 delegates to
a stimulating array of discussions by an impressive line-up of speakers and
panelists, inviting insightful debates and conversations. However, despite
the lucrative appeal of Asia, there remains challenges to be tackled
including market liquidity management concerns and the lack of an enabling
legal infrastructure in some jurisdictions. Another issue, as highlighted
by Jawad Ali, the managing partner of King & Spalding’s Middle East
offices, is the lack of understanding between capital seekers and capital
providers. “For example in Indonesia, there is a need for investment but I
think that the people who are trying to attract the investment and the
people who have the capital are not speaking the same language. GCC
investors are looking for new markets; the smart trading houses in Asia and
Africa have somethin g to gain if they can start speaking the same
language.”
Among key areas for growth are infrastructure and private equity. Professor
Dr Rifaat Ahmed Abdel Karim, CEO of International Islamic Liquidity
Management Corporation, emphasized in his opening keynote address that
Islamic finance players would be remiss if they did not recognize the huge
infrastructure needs of Asia and the opportunities they offer.
In terms of Sukuk, while the market has been experiencing a slowdown,
attributed largely to the anticipation of increasing interest rates,
issuers and regulators remain committed to developing the asset class with
several issuances in the pipeline. Malaysia’s Khazanah Nasional, for
example, is looking at expanding its SRI Sukuk program – the first issuance
under the Securities Commission’s SRI Sukuk Framework – to the retail
market next year, according to the chief investment officer Mohd Izani
Ghani; while Cagamas is planning to offer foreign currency Sukuk in the
near future, said CEO Chung Chee Leong.
While one cannot discuss the success of Asia’s Islamic finance story
without mentioning torchbearer Malaysia, an emerging theme from the forum
was the stronger presence by emerging markets, such as Japan and China, in
the Islamic finance space as they adopt ethical and SRI finance in a bid to
stabilize the financial system and push the Islamic finance agenda to
attract Muslim wealth. This diversification is most welcomed by industry
players as it signals a maturing market. “Malaysia’s dominance in this
segment must be joined by other countries in the near to medium-term,” said
Mohamad Safri Shahul Hamid, the senior managing director and deputy CEO of
CIMB Islamic.
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