Malaysia: Waqf Is Missing Piece In Islamic Financial System, Says CIMB Islamic

KUALA LUMPUR, Sept 24 (Bernama) -- Waqf (Wakaf) is the missing piece in Malaysia's Islamic financial system despite the country being the market leader with various sophisticated products and services.

CIMB Islamic Bank Chief Executive Officer Badlisyah Abd Ghani said: "Malaysia has from the simplest saving products to sukuk as well as many different sophisticated products for institutional investors, corporate clients, small medium entrepreneurs and individuals.

"(But) what is missing in the market today is waqf in a commercial manner," he told reporters on the sidelines of the 10th Kuala Lumpur Islamic Finance Forum (KLIFF 2013) here today.

Waqf is an Islamic endowment of property to be held in trust for religious or charitable purposes.

Badlisyah said to have waqf in the financial market, there is a need for a conducive legal framework that will allow for its incorporation in an effective manner.

"If we have it, over time, waqf could be the bigger component of the Islamic financial market, as what was in the golden era of Islamic civilisation in the past," he added.

Badlisyah said in order to have that legal framework, there is a need for dialogues between the federal and state governments as the laws concerning waqf are currently under the jurisdiction of the state Islamic religious councils.

In his opening speech, he said the current legal framework for waqf does not allow for the proliferation of waqf across all areas of economy.

In the afternoon session, Badlisyah called on the government to provide incentives in the upcoming Budget 2014 to encourage industry players to list sukuk on Bursa Malaysia, a move which would further enhance the sukuk market.

"Of course, this need to be reviewed and studied by Bursa Malaysia and Securities Commission in terms of its viability but at the end of the day, it does create a good communication to the rest of the world that the market in Malaysia is significant because it is in the public domain," he said.

Badlisyah said, for example, on the London Stock Exchange, they have a few billion dollars worth of sukuk listed on the exchange and as a result, they claimed they are one of the largest sukuk markets in the world, despite some of these sukuk were issued outside London.

"It is the same in Malaysia. We already have the largest number of sukuk in the world, but it is just not listed and not in the public domain," he said.

With the listing of sukuk, overtime, it would encourage more trading of sukuk by individuals and the price discovery is also better as it is publicly available, resulting in a more vibrant sukuk market.

(National News Agency Of Malaysia / 24 Sept 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: New legal set-up to pave way for syariah framework

KUALA LUMPUR: The new legal framework for Islamic banking and takaful, that will come into force this year, will pave the way for the development of an end-to-end Syariah-compliant regulatory framework for the conduct of Islamic financial operations, said Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz.

The new framework would provide clarity on the fundamental requirements of Syariah that must be adhered to for the contractual arrangements between the financial institution and the customer to remain enforceable, she said.“The framework also outlines the operational requirements for the effective application of Syariah principles in the conduct of Islamic financial institutions.“This aims to strengthen the risk management practices beyond the traditional credit, market and liquidity risks to also include inventory risk, ownership risk and Syariah compliance risk,” Zeti said at the opening of the Brunei Darussalam Islamic Investment Summit 2013.

The text of her speech titled, “Tapping and Expanding the Global Investment Opportunity in Asia’s Market”, was made available here today.

She said the legislation also provided for the resolution of Islamic financial institutions to be in line with distinctive elements of the relevant Islamic contracts, thus improving the legal and procedural aspects for the orderly resolution of Islamic financial institutions.

On the Islamic finance development, Zeti said the new wave of internationalisation for Islamic finance required increased collaboration across jurisdictions. — Bernama

to strengthen the international financial infrastructure of Islamic finance.“This is to ensure that the greater internationalisation of Islamic finance takes place in an environment of financial stability,” she added.

At the national level, Zeti said the first priority relates to trend for the domestic Islamic financial system to become more integrated, allowing for risks to be rapidly transmittal, across the financial system.“This requires the development of enhanced regulatory, supervisory and legal frameworks that are also adaptive and effective to the innovative dynamics and unique mix of risks in Islamic finance,” she said.

Zeti said the increased cross-border reach of Islamic finance has also underscored the importance of enhanced cross-border collaboration among the supervisory authorities.“Information-sharing and effective coordination among supervisors will enable a complete understanding of the entire risk spectrum of the risk taking activities undertaken across jurisdictions by the Islamic financial institutions,” she added.

Another key area is the evolution of the legal framework for Islamic finance to provide greater certainty and to build public confidence in the system as a whole, said Zeti.“This necessitates a legal framework that enforces end-to-end Syariah compliance in the Islamic financial services industry - through provisions and mechanisms that unambiguously define the conduct and governance of Islamic financial institutions,” she added.

Zeti also said with greater liberalisation, Islamic finance was increasingly supporting regional and international trade and investment flows, intermediating significant cross-border financial flows.“With its internationalisation, Islamic finance has become an increasingly more important channel for the efficient allocation of Asia’s surplus funds towards productive investments in the region,” she added.

Zeti also said efforts to strengthen the foundations for Islamic finance to ensure its continued resilience, amid the more challenging environment, must remain a priority going forward into the future.“Indeed, our commitment to act guided by this foresight will strengthen the prospect for Islamic finance to realise its potential in the region and beyond,” the governor added. 

(The Star Online / 21 June 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com