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Tuesday, 11 March 2008

Rising oil price to boost Islamic finance growth by over 20%

KUALA LUMPUR, March 10 (Xinhua) -- Islamic finance is expected to exceed 20 percent growth globally this year with rising oil price promoting liquidity and funds from countries in the Middle East, according an official of Yasaar Ltd on Monday.
There will also be a slight impact from the subprime market, said Majid Dawood, chief executive of Yasaar Ltd during a luncheon briefing on "Islamic finance in Asia" in Kuala Lumpur, capital of Malaysia.
With technology and international standards, Islamic finance could be further expanded to create more products acceptable internationally, he said.
"Once we get the standardization globally, that is when Islamic finance will take a larger share of the market," Malaysian national news agency Bernama quoted him as saying.
However, there was also a need to broaden understanding and knowledge on Islamic finance in line with current market developments, Dawood said.
With greater awareness and knowledge of the Islamic finance principles for market instruments such as hedging and derivatives as well as debt instruments, Islamic finance could make a greater impact and gain a larger share of the financial market, he said.
According to Dawood, Malaysia with its vast experience in Islamic finance can be a major player.
"Presently, Asian Islamic financial services are highly concentrated in Malaysia with focus on banking assets, sukuk issuance, asset management and takaful assets," he said.
Currently, Malaysia accounts for 76 percent of the banking assets in Asian Islamic financial Services, 95.5 percent of sukuk issuance in Asia and 83 percent of takaful assets in Asia.
"Asia is experiencing a boom in Islamic financial services. Thegrowth is being shaped by government support, customer demand and financial institution drivers," Dawood said.
Leading global players were bringing expertise to Islamic finance through subsidiaries, divisions or windows, he said.
Gulf Cooperation Council countries, including Saudi Arabia, Kuwait, Qatar, Bahrain and the United Arab Emirates (UAE) as well as Malaysian Islamic banks were exploring and expanding into new markets, he added.

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