Monday, October 27, 2008

BNM: No longer a domestic agenda

Islamic finance is no longer a domestic agenda for Malaysia as it was integrating globally and that the regulator was even offering various incentives to get the ball rolling for foreign investors and players in the country, says Bank Negara Malaysia (BMN) deputy governor Datuk Mohd Razif Abdul Kadir.
"We have to create awareness of the various opportunities available under the Malaysia International Islamic Financial Centre (MIFC)," he said on the sidelines of the MIFC road show to Kuwait and Saudi Arabia, in Riyadh, reports Bernama. Under MIFC, the central bank can issue new licenses for Islamic banking, takaful and fund managements to conduct international business in Malaysia. Another incentive for players was a ten-year corporate tax free business.
Bernama reports: According to Mohd Razif, sukuk or Islamic bonds are now also an important alternative for corporate fundings and Malaysia is a centre for sukuk origination and trading with a record of about 60% of issuance. He said despite the globl economic uncertainty since late last year which made it impossible to raise funds via conventional bonds in markets elsewhere, the issuance of sukuk was the opposite with some being oversubscribed.
"The US$4 billion (RM14.32 billion) sukuk raised for the Maxis buy-out last December was at the peak of the subprime crisis, where it was impossible to tap bond markets elsewhere.
"It was oversubscribed two times, eventhough it was the largest sukuk issuance in the world. This proves that Malaysia's sukuk market is large and very liquid for both local and foreign investors," he said.
Mohd Razif said another focus in the Islaimc financial sector was to encourage the Middle Eastern players to set up wealth management business in Malaysia to tap high networth investors who want to park their money within Islamic instruments.
"Malaysia has developed a very comprehensive Islamic banking system and a robust financial market with various products. The timing cannot be better where conventional financial instruments have had a depreciation while Islamic instruments remain steady," he said. — Bernama

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