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Friday, 17 August 2007

Malaysia poised to become attractive Islamic Capital Market (ICM) destination


KUALA LUMPUR: Malaysia is poised to become an attractive Islamic Capital market (ICM) investment destination as more market intermediaries are expected to set up operations in Malaysia, said Securities Commission director Dr Nik Ramlah. Speaking at her keynote address on the second day of the Malaysian Islamic Forum 2007, Issuers and Investors Forum on Tuesday, she said: "Efforts are currently being intensified to attract more foreign intermediaries to set up in Malaysia." The role played by these intermediaries has expanded dramatically in recent years, she added. "Intermediaries now engage in a broad range of complex financial transactions and operate in various market segments – banking, insurance and capital markets.
"They now underwrite complex financial transactions, provide specialised over-the-counter hedging and risk management products, and advise on sophisticated transaction structures," she added. On the other hand, she said that Malaysian intermediaries have also taken steps to strengthen their position by forging strategic alliances with foreign counterparts and venture into regional markets to acquire necessary skills and expertise in terms of new products and overseas investments. Similarly, a number of Islamic financial institutions from the various GCC countries are already operating in Malaysia. She said that the SC views Malaysia’s ICM as a high value-added segment that is now firmly well established. "We now set our sights on the next phase, which is to propel Malaysia’s ICM to the global arena through forging stronger alliances and linkages with other Islamic centres. "This requires even greater commitment from the private and public sectors working in partnership – to invest in intellectual capacity and capabilities for product origination and distribution," she said. In his luncheon address later in the day Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff also acknowledged the tremendous growth of the Islamic capital market in the past few years. He said that currently more than two-thirds of stocks listed on Bursa Malaysia are Shariah compliant and recognised by the Securities Commission’s Shariah Advisory Council (SAC). "Currently, 86% of all securities listed on the exchange are classified as Shariah-compliant. This accounts for approximately RM591bil or 64% of the total market capitalization," he said. In terms of Islamic funds in Malaysia, there 100 currently available with a total net asset value amounting to RM9.2bil. "This is in comparison to RM97mil in 1993. Without a doubt, we will see huge a opportunity for the Islamic unit trust industry to grow even further," he added. He also said that Bursa Malaysia is working closely with the Government parties to list the first Islamic Exchange Traded Funds (ETFs) by end of the year. "I believe the Islamic ETF will provide added diversity to our offerings, bridging gaps between us and global Islamic markets," he said. - (The Star, 14Aug 07)

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