CIMB Islamic chief executive officer (CEO) Badlisyah Abdul Ghani said the outlook for the global and local Islamic finance is bright.
He said globally, the industry is expected to benefit from the strong economic recovery in Asia, which is where Islamic finance is based and centred.
"Locally, the Malaysian market will continue to experience strong double-digit growth across all segments of the market and it will ride the economic growth momentum that is expected to be generated by the effective implementation of the government's New Economic Model," he told Business Times in an email interview.
He expects greater increase in consumer demands for Islamic micro finance as more people look for a head start in life, especially in emerging markets among the OIC countries.
Islamic wealth management is expected to pick up as more retail consumers in more advan-ced economy look for diversity, while greater sukuk issuance is anticipated as more infrastructure projects come on line.
Badlisyah also believes that Islamic trade finance will expand as intra-Asean and Asia trade picks up.
One development that raised some concerns within the industry is the growing interest of cooperatives at undertaking Islamic finance.
"This must be looked at carefully by all parties. If cooperatives are to be allowed to do Islamic finance, they should be limited to their core competencies," he said, adding that for a cooperative for farmers and agriculture, it should be limited to finance activities related to farming and agriculture.
Outside of Malaysia, he said major concerns among the industry players would be the introduction and implementation of legislation, regulation, legal and syariah governance framework by the government and regulators in countries interested to make Islamic finance a mainstream component of their financial market.
Islamic banking, which has been identified as one of the key sectors under the Economic Transformation Plan, is expected to further stimulate the growth of the industry sub-sectors like Islamic banking, capital market, fund management, asset management, wealth management, Takaful and reTakaful.
The sukuk issuance for next year is projected to surpass the record year 2007, driven by positive sentiment in the market and the need for corporations to raise funds to meet their financing needs.
Many infrastructure and utility projects under the the 10th Malaysia Plan (10MP, 2011-2015) - such as seven highway projects, two coal electricity generation plants and wireless broadband infrastructure - may tap the Islamic capital market to raise funds.
Maybank Islamic Bhd CEO Ibrahim Hassan said some of the funding needs for the projects under 10MP and ETP will be addressed through sukuk-raising exercises.
"Under the plan, Islamic finance is also expected to contribute to a higher and more sustainable economic growth while encouraging greater financial and trade flows between Malaysia and foreign countries, particularly Asia and the Middle East," he told Business Times.
Ibrahim said the industry is also expected to see further stimulus following the liberalisation of the financial sector. Under the liberalisation, foreign equity ownership is allowed to increase up to 70 per cent in Islamic banks, investment banks and insurance companies.
On the new players in the industry, he said the entrance of new Islamic financial institutions is positive signs in the overall economic sector.
"The increase in number of players in the industry would further enhance the position of Malaysia as the international hub for Islamic finance under the Malaysia International Islamic Financial Centre," he said.
Bank Negara Malaysia will award two banking licences to mega Islamic foreign banks, with a minimum capital of US$1 billion (RM3.09 billion) each, as well as two takaful licences. Malaysia so far has issued three Islamic banking licences to foreign operators. - By Hamisah Hamid
Source : http://www.btimes.com.my/Current_News/BTIMES/articles/YEAR2011/Article/ - Dec 28, 2010
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