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Saturday, 8 September 2007

Budget boost for Islamic finance in Malaysia

THE Government provided a major boost to the country's ambition to become an international hub for Islamic finance with attractive incentives in Budget 2008. It plans to allow Islamic fund management companies to be fully foreign-owned. They will be able to manage RM7 billion from the Employees Provident Fund. In addition, they can invest the funds abroad and their fees are tax-free until 2016, Prime Minister Datuk Seri Abdullah Ahmad Badawi said yesterday. These were among the measures announced in the budget yesterday to strengthen the Malaysia International Islamic Financial Centre (MIFC) initiative. "The fund management industry will definitely see a boost with the liberalisation announced in terms of foreign ownership," said Alliance Financial Group chief executive officer Datuk Bridget Lai. To boost Middle East investment in Malaysia, Abdullah, who is also Finance Minister, said three new licences will be issued to leading stockbroking companies to source intermediate business and order flows from the Arabs. "The liberalisation and incentives provided for Islamic fund management companies and stockbroking companies will certainly bring new funds into the country," said MIDF group managing director Mohd Najib Abdullah. To address the talent shortage in the industry, Malaysia will give income tax exemptions to non-resident consultants. Abdullah said in his presentation that this proposal, effective September 8 2007 until December 31 2016, is to attract leading global experts in Islamic finance. Recent data showed that close to 40 per cent of all syariah-listed equity funds in the world are listed in Bursa Malaysia which stood at about US$2 billion (RM7 billion) compared with US$5 billion (RM24.5 billion) worldwide.
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