SC gives nod to 2 foreign fund managers

By Habhajan Singh
Two Islamic fund managers, one from India and another from Kuwait, are the latest global players to receive approval to operate in Malaysia. The Securities Commission (SC), which regulates the investment side of Islamic finance, yesterday announced the approval given to India's Reliance Asset Management and Kuwait's Global Investment House.
They joined three other international Islamic fund managers already licensed by the SC — Kuwait Finance House (Malaysia), DBS Asset Management and CIMB Principal Islamic Asset Management.
Deputy Prime Minister Datuk Seri Mohd Najib Razak made the announcement when opening the Fifth Kuala Lumpur Islamic Finance Forum (KLIFF) 2008 in Kuala Lumpur yesterday.
"In addition, leading firms based in Malaysia, such as Prudential, are using Malaysia as their regional centre for Islamic fund management activities, reaffirming their confidence in Malaysia as an international Islamic financial centre," he told some 400 delegates attending the twoday conference, one of the largest Islamic finance-related activities in the country.
In the Budget 2008, the government had announced that Islamic fund managers were allowed to have 100% foreign ownership as part of on-going liberalisation measures in the capital market. Commenting on the granting of licences, Islamic bankers noted that this is an attempt to position Malaysia as a hub for the flow of investment from cash-flushed Middle East countries to other Asian nations.
"Malaysia can be their lauchpad into places like China and India.
"Malaysia has a longstanding business relationship with these nations. On top that, we are a known hub for Islamic finance," said Wan Asmadi Wan Ahmad who oversees the Islamic invesment business at Aseambankers Bhd. Islamic financing director at Barclays Capital Markets Malaysia Sdn Bhd Azmi Tahir said that the country would stand to benefit if the new asset managers use Malaysia as their gateway to regional countries.
"The move will diversify portfolio players and bring about new sources of inflows and investment," commented Baljeet Kaur Grewal (pictured above), managing director and vice chairman of KFH Research Ltd, the Kuala Lumpur-based global research arm of Kuwait Finance House.
In a separate statement, the SC said it is reviewing applications by other international financial institutions keen to make Malaysia their regional and global centre for Islamic fund management activities. The regulator has also been actively involved in establishing the framework and engaging with international fund managers and leading financial institutions to establish their Islamic fund management operations here.
"We are confident that these efforts will see positive growth in Shariah-compliant funds being managed in Malaysia, in tandem with the overall initiative to make Malaysia a global centre for Islamic fund management," said SC chairman Datuk Seri Zarinah Anwar .
In granting the approval, the SC said it had considered, among other things, the scope of operations that will be established by the two Islamic fund management companies (IFMCs) in Malaysia, their fund management and banking experience, brand value, expertise in various markets, geographical presence as well as compliance and risk management capabilities. Reliance Capital Asset Management is India's largest asset management company in terms of assets under management.
It also manages funds launched by Reliance Mutual Fund, the largest mutual fund house in India. Kuwait-based Global Investment House is a leading asset management and investment banking company with a wide distribution network encompassing 16 countries across the Gulf Cooperation Council (GCC), the Middle East and North Africa (MENA) region and other emerging markets. (The Malaysian Reserve, Nov 19, 2008, p1. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays)