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Sunday, 26 October 2008

Timely Offer Of Stability From Islamic Finance

RIYADH, Oct 26 (Bernama) -- In creating the awareness and benefits of Islamic financial system, Malaysia is offering itself as the perfect gateway for Middle Eastern financial players to tap in to the Asean region's potential of 600 million population.

Bank Negara Malaysia deputy governor, Datuk Mohd Razif Abdul Kadir today said Islamic finance was no longer a domestic agenda for Malaysia as it was integrating globaly, and that the regulator was even offering various incentives to get the ball rolling for foreign investors and players in the country.

"We have to create awareness of the various opportunities available under the Malaysia International Islamic Financial Centre (MIFC)," he said on the sideline of the MIFC road show to Kuwait and Saudi Arabia, here.

MIFC came into existence in 2006 under a collaborative effort by the country's financial and market regulators including BNM, Securities Commission, Labuan Offshore Financial Services Authority (LOFSA) and Bursa Malaysia - together with industry participation from the banking, takaful and capital market sectors in Malaysia.

"Under MIFC, we can isue new licenses for Islamic banking, takaful and fund managements to conduct international business in Malaysia," he said adding that another incentive for players was a 10-year corporate tax free business.

According to Razif, sukuk or Islamic bonds are now also an important alternative for corporate fundings and Malaysia was a centre for sukuk origination and trading with a record of about 60 percent 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 sukuk raised for 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.

Razif said another focus in the Islaimc financial sector was to encourage Middle Eastern players to set up wealth management business in Malaysia to tap high networth investors who want to park their money in Islamic instruments.

"Malaysia has developed a very comprehensive Islamic banking system and robust financial market with various products. The timing cannot be better where the conventional financial instruments have had a depreciation while the Islamic instruments remain steady," he said.

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