Islamic finance industry in Malaysia needs more perks

KUALA LUMPUR: Islamic finance (IF) still requires incentives like tax deductions to spur the industry further, say top industry executives. 

CIMB Islamic Bank Bhd’s chief executive officer (CEO) Badlisyah Abdul Ghani said government started offering incentives only from around 2004/2005 to jumpstart the industry amid strong demand for IF products but few suppliers in the market.

“The demand was there but the players were not keen to do the business. So, the reason the incentives were given was to get the industry moving. As a result of that, the supply of IF instruments and products became more, and the interest from consumers grew as they now had more choice of products,” he said during a panel session on the internationalisation of IF at the Malaysian Banking Summit here yesterday.

He went to say that the industry was, in fact, asking the government for more incentives under the upcoming national budget.

“One of the things that I personally asked for was to allow banks to have a double-tax deduction or tax rebate for investment in information technology, so that we can get rid of all the manual interventions that we currently have today in the provision of IF products,” he said.

The panel, which included Hong Leong Islamic Bank Bhd’s CEO Raja Teh Maimunah and Maybank Islamic Bhd'’ CEO Muzaffar Hisham, had been asked by a member of the audience if the IF industry here would be able to sustain itself should the incentives be discontinued.

Malaysia, which first embarked on Islamic finance 30 years ago, has become a global hub for the industry even as other jurisdictions have sprouted up.

However, the industry still needs incentives while it aspires to be an international Islamic financial centre, Raja Teh said.

“We’ve not really gotten the kind of traction we want. Until and unless we truly have got that kind of volumes, I don’t see those incentives being pulled out so quickly,” she remarked.

Meanwhile, Badlisyah said Malaysia had a lot to offer the world, in terms of innovation and development as it had already built up expertise in all segments of the IF industry.

It can also lead by example in terms of how the industry is governed, in terms of its comprehensive framework and legislation.

He stressed that the IF industry was no different from conventional finance in that it was also susceptible to a financial crisis, the likes the US had seen.

“It is susceptible to the same crisis because greed is human nature. It’s got nothing to do with the industry. 

We can have all the structures in the world, the best governance and regulatory framework, but the moment we do not manage greed, it is dangerous,” he said.

(Business Times, 29 July 2012)

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Malaysia: Need to build up confidence to promote Islamic finance globally

KUALA LUMPUR: Although Malaysia has one of the most established and regulated Islamic finance frameworks, local financial institutions need to build up confidence to promote it in the global Islamic finance market.

CIMB Islamic Bank Bhd chief executive Badlisyah Abdul Ghani said although Islamic finance had been thriving in the domestic market, most of the local banks had not been active in the global syndication market or even the sukuk market.

He said Malaysians tended to be apologetic about their own Islamic finance framework, perceiving it as inferior to other syariah-compliant frameworks, rather than introducing it as a quality market-leading financial product.

“This is not healthy for the international market because we are supposed to be the leader here. That is the only thing that is lacking in our initiative to internationalise our framework,” he said at the 16th Malaysian Banking Summit.

He said Islamic finance had helped Malaysia achieve financial inclusion and, if the World Bank could introduce the Malaysian Islamic finance model to its member countries and Organisation of the Islamic Conference (OIC) countries and encourage them to replicate it, it would help the countries to be financially independent. “And that would enhance global trade.”

Badlisyah also said that Malaysian Islamic financial institutions seemed to overlook the less popular OIC countries in favour of the rich nations in the Gulf Cooperation Council (GCC).

“Somehow, we seem to bypass the natural markets for Islamic finance. Malaysia can play the role of a big brother' for the OIC countries which have yet to develop their indigenous Islamic finance,” he said.

“There is a lot of talk in the international financial market that Islamic finance has too much focus on the rich, institutional investors, big corporates and the likes despite our affinity with ethics.”

Hong Leong Islamic Bank Bhd chief executive Raja Teh Maimunah Raja Abdul Aziz, however, noted that there would be much to overcome before the Malaysian Islamic finance model could penetrate the OIC countries.

“The objective of syariah and how to deploy equity in justness which is not easy because at the end of the day it is about bottomline and numbers (so) to go to the OIC countries as banks is also based on credit rating,” she said, highlighting that most of the banks in those countries were either poorly rated or not at all.

While local banks might want to reach out to introduce the Malaysian Islamic finance framework, she noted that without the acceptable credit rating, local banks would not be able to create any correspondent relationship.

(The star Online / 28 July 2012)
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Malaysia: Danainfra issues RM8b sukuk for MRT’s SBK Blue Line

KUALA LUMPUR (July 4, 2012): The government is issuing an RM8 billion sukuk financing programme to partly finance the Mass Rapid Transit (MRT) project which is developed and managed by Mass Rapid Transit Corp Sdn Bhd (MRT Corp).

The sukuk will be issued via Danainfra Nasional Bhd, a wholly-owned subsidiary of Minister of Finance Inc. Danainfra is a special funding vehicle for the government to source for funds to finance its infrastructure projects, with the MRT project being the first.

Yesterday, Danainfra signed the agreement for the Islamic commercial papers and medium term notes programme with four banks.

Minister of Finance II Datuk Seri Ahmad Husni Hanadzlah, who witnessed the signing, said: "It is expected that around RM30 billion worth of funds will have to be sourced to finance the completion of the Sungai Buloh-Kajang line, also known as the SBK Blue Line, which is the first line to be constructed under the MRT project.

"It is hoped that with more good quality sukuk being issued to the market, this may create further depth and drive further activity and liquidity through higher volumes being traded on a day-to-day basis."

The RM8 billion is the first tranche of financing for the MRT project's SBK Blue Line. The entire MRT project is scheduled to be operational by July 2017 and to date, 33 out of 85 work packages have been awarded to the value of RM15.5 billion.

The maiden issuance will be the Islamic medium term notes of up to RM2.4 billion which is targeted for July 20, with book-building expected to be held on July 9 or 10.

To date, Danainfra has provided total financing of up to RM1 billion for the MRT project.

Danainfra principal officer Fazlur Rahman Ebrahim said of the RM2.4 billion, RM1 billion will be for bridging loans and the rest to finance the project.

He said the subsequent issuance is expected in October, to the value of RM5.6 billion and the total RM8 billion will be fully exhausted by June 30 next year.

All the tender packages are expected to be awarded by year-end and the actual cost of the entire project will be determined in the first quarter of 2013.

Husni said a way to increase investor base is by tapping the retail market and introducing longer-dated bonds.

"The retail bonds will allow members of the public to invest in bonds or sukuk in lower denominations of RM1,000 and above. The longer-dated bonds will have tenors beyond the normal tenor of 10, 12 and 15 years currently available in the market.

"We would like to see bonds or sukuk with tenor of maturity of 25 years and above. The introduction of retail bonds or sukuk and longer-dated bonds will further spur the Malaysian capital markets and the country's economy as a whole.

(The Sun Daily / o4 July 2012)

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StanChart makes KL hub for Islamic banking

Standard Chartered Bank is making Kuala Lumpur its global business hub for Islamic consumer banking. 

This is part of a strategy to grow its Islamic banking business in Malaysia and across its global footprint. 

In this regard, Standard Chartered's Global Head of Islamic Banking and a new team of experts, will be based at its head office in the capital by year-end to further drive business momentum in the country. 

It will also continue working with other new markets to build and strengthen its Islamic banking proposition under the Standard Chartered Saadiq brand. 

In a statement today, Standard Chartered said the new hub underscores the strategic importance of the Malaysian market for the bank's overall strategy and ambitions for the Saadiq franchise. 

"Malaysia has established itself as a leading international Islamic financial centre. 

"With Kuala Lumpur as our global hub for Islamic consumer banking, we look forward to capitalising on Malaysia's long-standing experience and expertise in Islamic Banking, and further contribute to the scale of Islamic finance activities in the country," said Standard Chartered Saadiq chairman, Shayne 

Nelson. 

The new global hub will managed by Wasim Saifi as the new chief executive officer of Standard Chartered Saadiq Bhd, in addition to his role as Global Head, Islamic Consumer Banking. 

Standard Chartered Bank was the first international bank in Malaysia to offer Islamic banking products in 1993. 

In 2008, Standard Chartered Saadiq Bhd was established as a full-fledged Islamic banking subsidiary, and has launched several first-to-market Islamic products.

(Business Times / 05 July 2012)

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Malaysia’s halal logistics sector on the uptrend

KUCHING: Malaysia is expected to see its US$1.9 billion (RM6.05 billion) halal logistics sector to grow in tandem with the halal food industry.

The industry was pegged to be a lucrative business thanks to the huge number of Muslims in the world which currently stands at 1.79 billion, said Inside In­vestors country publisher Cory D’Abreo.

“In Malaysia there are approxi­mately 17.5 million Muslims, accounting for 60.4 per cent of the total population,” he stated in his report.

Thus, D’Abreo said the increase of halal food exports could fur­ther boost the logistics growth in Malaysia as there would be a need for freight-forwarding and transportation services.

D’Abreo further pointed out that it required highly sophisticated and strictly controlled logistics operations to prevent the cross-contamination of products dur­ing storage and distributions.

“Dedicated logistics infrastruc­tures and manageable halal logistics operations are crucial for any logistics service provid­ers keen to venture into the halal industry,” he added.

Logistics service providers need to equip themselves with the ability to fulfil the halal require­ments, besides maintaining the high efficiency and effectiveness of their operations to reduce the logistics costs for clients.

Going forward, Malaysia has the potential to become a global halal hub, supported by the MS2400 Halalan-Toyyiban standards that ensured all halal practices were incorporated across difference logistics functions.

Additionally, Frost & Sullivan estimated that halal logistics was worth about US$1.9 billion in the Ma­laysian halal food industry.

“There are a lot of opportunities for local logistics service pro­viders in Malaysia considering the potential of the global halal food market, valued at about US$1.2 trillion in 2010,” added D’Abreo.

“Given Malaysia’s strong halal brand recognition and halal lo­gistics standards, local logistics service providers should tap into the growth opportunities in the halal sector,” he added.

On top of that, Malaysia could also potentially become the regional halal hub in Asia con­sidering that Asian countries contribute about 64 per cent of the global halal food expenditures, valued at about US$770 billion.

Malaysia’s halal food industry alone was valued at about US$15.7 billion in 2010. It exported a total of RM3.94 billion worth of halal-processed food in 2008 to the Or­ganisation of Islamic Conference (OIC) countries.

“International Investor together with our knowledge partner, frost & Sullivan believes that local logistics service providers should create awareness with current manufacturers and re­tailers to use halal compliant lo­gistics services to penetrate into the majority Muslim community in Malaysia,” D’Abreo said.

“On the other hand, Malay­sian logistics service providers should also focus on developing and expanding the range of serv­ices offered to compete with the international logistics provid­ers,” he added.

He further suggested that Malay­sian logistics providers should put more focus on logistics tech­nologies that could increase their competitiveness advantages.

“The logistics industry is also expected to consolidate due to the fragmented nature of the sector. Major logistics service provid­ers are likely to increase their market share by mergers 

and acquisitions,” he concluded.

(Borneo Post Online / 15 July 2012) 

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Securities Commission Malaysia names new Shari'ah Advisory Council members

The 11 SAC members, appointed by the Yang di-Pertuan Agong under section 316C of the Capital Markets and Services Act 2007 (CMSA), are:

Tun Abdul Hamid Haji Mohamad, Former Chief Justice of the Federal Court, Malaysia

Tan Sri Sheikh Ghazali Haji Abdul Rahman, Shari’ah Legal Advisor, Attorney General's Chambers

Dato' Dr. Abdul Halim Ismail, Pro-Chancellor Insaniah University College and Chairman, Shari’ah Committee of Shari’ah-Compliant Funds of Amanah Mutual Bhd

Dr. Mohd. Daud Bakar, Chairman, Shari’ah Advisory Council of Bank Negara Malaysia and CEO of Amanie Advisors Sdn. Bhd.

Dr. Muhammad Syafii Antonio, Rector of TAZKIA University College of Islamic Economics, Bogor, Indonesia

Professor Mohammad Hashim Kamali, Founding Chairman and CEO of the International Institute of Advanced Islamic Studies, Malaysia

Professor Dr. Ashraf bin Md Hashim, Head of Consultancy Department, International Shari'ah Research Academy for Islamic Finance (ISRA)

Associate Professor Dr. Azman bin Mohd Noor, Department of Fiqh and Usul al Fiqh, Kulliyyah of Islamic Revealed Knowledge and Human Sciences, International Islamic University Malaysia

Assistant Professor Dr. Aznan Hasan, Department of Islamic Law, Ahmad Ibrahim Kulliyyah of Laws, International Islamic University Malaysia

Associate Professor Dr. Engku Rabiah Adawiah Engku Ali, Institute of Islamic Banking and Finance (IIBF), International Islamic University Malaysia

Associate Professor Dr. Shamsiah Mohamad, Lecturer, Department of Fiqh and Usul, Academy of Islamic Studies, University of Malaya

The SAC is a key pillar in the development of the Islamic capital market in Malaysia especially in facilitating innovation and ensuring a robust Shari’ah governance process. The function of the SAC provides greater consistency and clarity to issuers, intermediaries and investors in the Malaysian Islamic capital market. The SAC also plays an instrumental role in strengthening the country's position as a leading international Islamic financial centre.

Under the CMSA, the SAC is empowered to ascertain the application of Shari’ah principles on any matter pertaining to Islamic capital market business or transaction, and to advise the SC on any Shari’ah issue relating to Islamic capital market business or transactions.

The SAC is also empowered to provide advice to any person on Shari’ah issues relating to Islamic capital market business or transaction.

(C.P.I Financial / 19 July 2012)

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Axiata Plans to Raise $1.5 Billion via Sukuk

Axiata Group Bhd. said it plans to raise up to $1.5 billion by issuing multi-currency Islamic bonds to secure cheap long-term funds and improve capital efficiency.

Malaysia's largest mobile telephone company by sales said in a statement to the stock exchange that it would be the first Asian telecommunications company to issue multiple currency Islamic bonds, or sukuk.

It didn't specify which currencies, nor did it specify maturities or the number or size of tranches.

It called the issuance "strategic" as it would appeal to regional investors while also introducing the company to a diverse pool of investors across the Middle East and Europe, increasing its prospects for future fundraising.

Islamic financing differs from conventional financing in that it adheres to Shariah, or Islamic law, which prohibits the charging of interest and discourages speculation or benefiting at the expense of others.

Sukuks were first sold in 1990 by a Malaysian unit of Royal Dutch Shell PLC (RDSA.LN). They comply with Shariah by replacing coupons with payouts derived from tangible assets, such as leases or joint ventures.

Axiata plans to count air time vouchers--minutes on its mobile network--among its assets underlying the sukuk.

"Whilst Axiata has no immediate funding requirements, having the programme in place will enable the Group to remain nimble and able to move quickly in the event of any changes and demands of the marketplace," Group Chief Financial Officer James Maclaurin said in the statement.

The sale will also support government efforts to position the Southeast Asian nation at the centre of global Islamic finance, President and Chief Executive Jamaludin Ibrahim said.

Malaysia accounted for 68.7% of the $84.4 billion worth of sukuk issued worldwide in 2011. Global sukuk issuance totaled $43.5 billion in January-March, 55% more than in the same period last year, and with Malaysia accounting for 71%.

Malaysia's primary need for capital comes from large infrastructure projects, such as an urban rail transport project, under the government's Economic Transformation Program. This initiative began in 2010 with the goal of turning the economy into a developed economy by 2020.

CIMB Bank Ltd., HSBC Amanah Malaysia Bhd. and Merrill Lynch (Singapore) Pte. Ltd. will be the joint lead arrangers for Axiata's planned sukuk sale.

(Fox Business / 19 July 2012)

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Malaysia: Labuan on track to emerge as halal distribution hub

LABUAN: Labuan’s halal distribution hub will begin operations early next year and be on par with other halal centres in the Asian region.

Construction of phase one of the Kiamsam-based RM86 million project began in March 2009 and was nearing completion while the second phase would be implemented in stages and have numerous economic spin-offs especially to the small-and-medium entrepreneurs.

The hub, a collaborative initiative by Labuan Corporation, Marditech Corporation Sdn Bhd and the Ministry of Federal Territories and Urban Wellbeing, is managed by Labuan Halal Distribution Hub.

Once fully operational, the Labuan Halal Distribution Hub will be the centre of distribution for Malaysian halal products both for the domestic and international market. Labuan Corporation public relations officer Jah Murniwaty Markum told Bernama a comprehensive strategic plan has been put in place to ensure the hub was not left behind and would remain competitive.

The hub, sprawled over 40 hectares and mainly focused on the marine-based products, will house a warehouse complex, dry warehouse, cold room facilities and have in place a traceability system.

Jah Murniwaty said the global halal industry was worth RM300 billion and Malaysia assumed a significant role after having exported some RM35 billion worth of halal products last year.

“Our main exports markets for halal products are China, United States,  Singapore, Netherlands and Japan, and Middle-East countries.

“With the right strategy and marketing promotion, we are confident the Labuan halal distribution hub would compete on an equal platform and leaf-frog the role of local SMEs into the limelight.

The halal hub would assume an important role in determining that the quality of products adhere to high stringent standards to elevate Labuan to the global stage.

(Berneo Post Online / 23 July 2012)

LABUAN: Labuan’s halal distribution hub will begin operations early next year and be on par with other halal centres in the Asian region.

Construction of phase one of the Kiamsam-based RM86 million project began in March 2009 and was nearing completion while the second phase would be implemented in stages and have numerous economic spin-offs especially to the small-and-medium entrepreneurs.

The hub, a collaborative initiative by Labuan Corporation, Marditech Corporation Sdn Bhd and the Ministry of Federal Territories and Urban Wellbeing, is managed by Labuan Halal Distribution Hub.

Once fully operational, the Labuan Halal Distribution Hub will be the centre of distribution for Malaysian halal products both for the domestic and international market. Labuan Corporation public relations officer Jah Murniwaty Markum told Bernama a comprehensive strategic plan has been put in place to ensure the hub was not left behind and would remain competitive.

The hub, sprawled over 40 hectares and mainly focused on the marine-based products, will house a warehouse complex, dry warehouse, cold room facilities and have in place a traceability system.

Jah Murniwaty said the global halal industry was worth RM300 billion and Malaysia assumed a significant role after having exported some RM35 billion worth of halal products last year.

“Our main exports markets for halal products are China, United States,  Singapore, Netherlands and Japan, and Middle-East countries.

“With the right strategy and marketing promotion, we are confident the Labuan halal distribution hub would compete on an equal platform and leaf-frog the role of local SMEs into the limelight.

The halal hub would assume an important role in determining that the quality of products adhere to high stringent standards to elevate Labuan to the global stage.

(Berneo Post Online / 23 July 2012)

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Malaysia's pension reform may boost Islamic funds

* Malaysia liberalising pension market

* Govt sees 73 bln ringgit into private pensions by 2020

* Eight fund managers approved to offer products

* Product limit raised if it includes Islamic offerings

By Bernardo Vizcaino

SYDNEY, July 23 (Reuters) - Malaysians will have more room to allocate part of their retirement contributions to Islamic investments under sweeping government reforms to the pension system.

At present, the Employees Provident Fund (EPF) receives public pension contributions and invests the money. Some of that investment is in sharia-compliant areas such as sukuk and halal stocks, but contributors have limited scope to ensure the money is being used that way. A maximum 20 percent of savings can be placed through the EPF into a single mutual fund.

Under the new, voluntary Private Retirement Scheme (PRS), which will not replace the EPF but supplement it, contributors will be able to allocate money to a wide range of products offered by private-sector fund management firms. This will allow them, if they choose, to target sharia-compliant investment - potentially increasing the amount of money going into Islamic instruments.

The scheme's governing body which will oversee how the fund managers operate, the Private Pension Administrator (PPA), was officially launched last week.

"PRS will contribute towards the growth of Islamic fund products," Zakie Ahmad Shariff, board member of the PPA and chief executive of the Federation of Investment Managers Malaysia, told Reuters.

The initial rollout of 30 PRS products will include six Islamic funds, he added.

"Early adopters will have much to gain - especially for the Islamic players," said Mahadzir Ahmad, a wealth management consultant and an instructor at the Financial Planning Association of Malaysia.

GROWTH

As of March 31 the EPF managed assets worth 488.5 billion ringgit ($154 billion), according to company data. That is larger than the 435.36 billion ringgit of assets under management in Malaysia's entire fund management industry, according to securities commission data.

At least partly because of PRS, Malaysia's private pension industry is expected to grow to 73 billion ringgit by 2020 from effectively zero now, according to a report by the government's Economic Transformation Programme. The securities commission has a more modest but still sizeable estimate; in April last year, it said: "Over the next ten years, it is projected that assets under management in the private retirement scheme industry will grow to 30.9 billion ringgit."

Sharia-compliant funds have on average held 10.6 percent of total assets under management in Malaysian retail products over the last two years, according to Reuters calculations based on securities commission data.

If this ratio is maintained under the PRS scheme, Islamic funds could theoretically see inflows of 3.3 billion to 7.7 billion ringgit.

All eight of the approved PRS fund managers already have sharia-compliant retail products. They include some of the country's most established firms such as CIMB-Principal, AmInvestment and Public Mutual.

Firms will begin offering conventional products first but sharia-compliant products will soon follow, said Nancy Chow, director of marketing and strategic product development at AmIslamic Funds Management. AmInvestment plans to have an Islamic PRS, she said.

Hwang Investment Management will include sharia-compliant products in its PRS range, Steve Lim, chief product officer at Hwang Investment Management, said in a statement. "We foresee our investment in PRS to break even after three years."

PRODUCTS

Under PRS, fund managers will be required to offer a minimum of three "core" products catering to different investor risk profiles. A maximum of seven products can be launched under the scheme by a single PRS provider, but if it intends to offer both conventional and sharia-compliant options, it can offer up to 10, according to securities commission guidelines.

This could encourage fund managers to launch Islamic products to maximise their access to PRS money. The initial products will be available from September, the securities commission said.

Guidelines also allow for the outsourcing of the fund management function, which could open the door for boutique firms to tap into the sector without the need for established sales channels.

In order to encourage take-up in the PRS scheme, the government is offering incentives such as personal tax relief, tax deductions for employers on their contributions to the scheme, and tax exemption on income received by PRS fund management firms.

Some details of how the PRS scheme will work, and whether it will impact Malaysia's current retirement age of 55 years, are not clear, Ahmad said. "These details are not forthcoming yet."

The personal tax relief of up to 3,000 ringgit may need to be increased to make it enticing to higher income earners, he added. Without a significant tax benefit, "the take-up might not be as great.

(Reuters / 23 July 2012)

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Bank Muamalat Malaysia To Open Islamic Bank In China

Bank Muamalat Malaysia Bhd has teamed up with Bank of Shi Zui Shan of China to set up its first Islamic bank in China - in Ningxia Province, in two years, and develop and promote Islamic banking there.

Bank Muamalat's chief executive officer Mohd Redza Shah Abdul Wahid said the two banks will work together in setting up a framework for Islamic banking in China and aim to offer syariah-compliant products in Ningxia via a window at Bank of Shi Zui Shan's network of 23 branches.

(Reuters / 23 July 2012)

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Malaysia's Value Proposition - International Takaful

Malaysia's in-depth experience and solid fundamentals in Islamic finance developed over more than 30 years, offer strong value propositions to foreign financial institutions to establish takaful operations in Malaysia to conduct foreign currency business. 

Well-Developed Market

Malaysia has placed an equal emphasis on the four core sectors in Islamic finance – Islamic banking, takaful, Islamic capital market as well as Islamic money market. Malaysia is one of the leading takaful market and has been experiencing rapid growth. As at 2008, total assets of Malaysia's takaful industry amounted to USD3 billion, with market penetration of 7.5%. Takaful assets and net contributions experienced strong growth with an average annual growth rate of 21% and 29% respectively from 2004 to 2008¹.

The rapid liberalisation of Malaysia's Islamic finance industry has encouraged foreign institutions' participation in Malaysia, thus creating a diverse and growing community of domestic and international takaful operators that have acknowledged experience in the takaful industry. Currently, there are eight takaful operators and four retakaful operators, with five foreign participations from the UK, Bahrain, Germany and Japan. These takaful operators conduct both domestic and foreign currency business.

Adopt Global Legal and Regulatory Best Practices

Malaysia's legal framework caters for Islamic finance matters. There is a dedicated judge at the High Court level for Islamic finance matters. The Kuala Lumpur Regional Centre for Arbitration has specific capabilities to deal with Islamic contract matters. This legal framework enables the enforceability of Islamic finance contracts while providing strong governance and legal redress for Islamic financial institutions. 

The Malaysian takaful industry is governed by the Takaful Act 1984, which provides the legislative framework for the licensing and regulation of takaful businesses to ensure the businesses are in accordance with the Shariah principles.

The development of various regulatory guidelines has been instrumental in providing consistency and clarity for the operations of Islamic finance in Malaysia. In addition, Malaysia's Islamic regulatory guidelines have also set the benchmarks for other countries in developing their own Islamic industry.

Well-Developed Shariah Governance Framework 

The Central Bank of Malaysia (Bank Negara Malaysia) has established a centralised Shariah Advisory Council (SAC) to advise on issues related to Shariah compliance matters pertaining to the Islamic banking and takaful industry. The approach was taken, by recognising the importance of Shariah compliance in the Islamic financial system which possesses distinctive characteristics when compared to the conventional system.

The SAC is responsible for analysing issues on Islamic banking and takaful matter, to ensure the aspects of the operations of Islamic financial institutions are in accordance with Shariah principles. 

Comprehensive Human Capital Development 

Malaysia has placed a strong emphasis on human capital development alongside with the development of Islamic finance industry to ensure the availability of Islamic finance talent. As a result, Malaysia has a large and diverse pool of Islamic finance talent comprises product innovators, regulators, intermediaries and risk managers who have both financial and Shariah knowledge and expertise. 

Malaysia adopts a structured and comprehensive approach to human capital development in Islamic finance to meet the growing needs of Islamic finance talent by domestic and foreign financial institutions. Several learning institutions offer wide range of Islamic finance training programmes to develop Islamic finance professionals and cultivate Islamic finance thought leadership. 

Liberal Foreign Exchange Administration (FEA) Rules

Malaysia's liberalised foreign exchange administration rules enhance Malaysia's competitiveness and business efficiency, while promoting financial and economic stability. 

The relaxation in rulings was made in tandem with the readiness of the Malaysian economy to support the country's growth and competitiveness, whilst creating conducive business environment for foreign financial institutions. (MIFC)

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