malaysia opportunities in islamic finance
TRANSCRIPT
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 1/12
Malaysia: Opportunities in Islamic Finance
December 2008
Shariffuddin Khalid
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 2/12
2
Opportunities in Malaysia
Malaysia
East Asia
Malaysia - Gateway to ASEAN &AFTA, fast growing with 600 m pop.
Malaysia International IslamicMalaysia International Islamic
Financial CentreFinancial Centre -- MIFCMIFC
World Class Islamic
Financial Centre
I s l a m
i c F u n d & W
e a l t h
I s l a m
i c F u n d & W
e a l t h
M a n a g e m e n
t
M a n a g e m e n
t
H u m a n C a p i t
a l
H u m a n C a p i t a l
D e v e l o p m e n
t
D e v e l o p m e n
t
I n t e
r n a t i o n a l I s l a m i c
I n t e r n a t i o n a l I s l a m i c
B a n k i n g
B a n k i n g
I n t e
r n a t i o n a l T a k a f u l
I n t e
r n a t i o n a l T a
k a f u l
World Class Legal, RegulatoryWorld Class Legal, Regulatory
and Shariah Frameworkand Shariah Framework
S u
k u k
S u
k u k O r i g i n a t i o n
O r i g i n a t i o n
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 3/12
3
Evolution with strategic direction
Market liberalisation, adopt internationalstandards & best practices
Increase number of players, developfinancial markets and enhance Shariah
governance
Building solid foundation of legal,regulatory and Shariah framework
Advanced stageStrategic positioning &international integration
Intermediate stageInstitutional building,activity generation &
market vibrancy
Inception stageInstituting foundations of
Islamic finance
Robust Islamic financial system build from strength to strength
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 4/12
4
Malaysia’s comprehensive Islamic financial landscape
• 17 Islamic banks (IBs)
9 9 local banking group/Islamic Subsidiaries
9 2 local IBs
9 6 foreign IBs• 5 approved International Islamic Banks
• As at Sept. 2008:
9Assets: USD67b (16.6% mkt share)9Financing: USD40b (18% mkt share)
9Deposits: USD51.5b (18.1% mktshare)
• 8 Takaful Operators• 1 International Takaful
Operator• 3 Retakaful Operators• As at Sept 2008:
9Assets: USD2.92b
¾Family: USD2.47b
¾General:USD0.45b
• Securities turnover (Jan-Sept: USD17.2b)• Monetary tool
• Managing daily liquidity requirements
• 56% of outstandingbonds are Sukuk(end-Sept 2008)
• 85% Shariahcounters
• 149 Islamic unittrust
• 5 approved IslamicFund Management
Companies
(Exchange rate @ USD1 = RM3.5)
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 5/125
International Islamic Banking
Islamic Fund & WealthManagement
Sukuk Origination
Human Capital Development
International Takaful
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 6/126
International Islamic Banks (IIB) International Currency Business Unit (ICBU)
Licensed under IBA*
Conduct non-RM Islamic commercial &
investment banking & other banking business
specified by BNM
Subsidiary or branch PUC/net working fund: RM10 mil (USD2.9m)
Annual licence fee: RM50,000 (USD14,286)
Up to 100% foreign equity
Set up by existing banks licensed under IBA or
BAFIA*
Conduct non-RM Islamic commercial & investment
banking & other banking business specified by
BNM Dedicated division headed by senior management
officer of the entity
Separate accounts from RM transactions of entity
Takaful
International Takaful Operators (ITO) International Currency Business Unit (ICBU)
Registered under TA*
Conduct non-RM composite takaful & re-takaful business
Subsidiary or branch
PUC/net working fund: RM10 mil (USD2.9m)
Annual licence fee: RM5,000 (USD1,428)
Up to 100% foreign equity
Set up by existing takaful operators registered
under TA Conduct non-RM composite takaful & re-takaful
business
Dedicated division headed by senior management
officer of the entity
Separate accounts from RM transactions of entity
International currency business
Islamic Banking
* IBA: Islamic Banking Act, TA: Takaful Act, BAFIA: Banking and Financial Institutions Act
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 7/127
Human Capital Development
International Islamic Banking
Islamic Fund & WealthManagement
Sukuk Origination
International Takaful
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 8/12
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 9/129
Tax incentives for players• 0% tax for international
currency business – IIB,
ITO, ICBU 0% tax for Islamic Fund
Management Companies(IFMC)
Tax deduction – expenses inestablishing Islamic stock
broking firm
Tax incentives for issuers• Tax deduction on issuance
cost
• Full stamp duty exemption
• Tax neutrality
• Tax exemption on SPV
Tax incentives for investors• No withholding tax on
income from Islamic
securities
• No capital tax gain
• 10% tax for REITs investors
Foreign equity
Up to 49% foreign
ownership in:
9 Islamic banks9 Takaful operators
Up to 100% foreign
ownership in
9 IIB, ITO
9 IFMC
9 Retakafulcompanies
Liberalised forex rules
Open and free foreign
exchange rules
Free to repatriate funds,profits, income
Free to hedge positions
Free to convert foreign
currency into RM/vice
versa
Investment abroad
Allow 100% investment
abroad for IFMC
New licences• IIB
• ITO
• IFMC
• Retakaful companies
Flexible structure:• IIB, ITO and Retakaful
can be set up assubsidiary or branch
• Flexible requirement onnumber of expatriate forIIB, ITO and Retakafulcompanies
No limit on number oflicences to be issued forinternational currenciesbusiness
Opportunities in MIFC
Licensing
Opportunities
Liberalised
RegulatoryFramework
Efficient
Delivery
Conducive
Environment
Facilitative approval
process
Deemed approval for
issuance:9 AAA (local rating)
9 BBB (international
rating)
International ratingallowed
Internationaldocumentation allowed
Shariah
Mutual recognition of
Shariah interpretations
Cross boarder initiative
Mutual recognition
arrangements with other
jurisdictions for
marketing, distribution of
Islamic funds
Facilitative immigration
policy
M l i ’ Ed Wh M l i t ?
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 10/12
10
Malaysia’s Edge: Why Malaysia as a centre?Malaysia has put in place a strong foundation and the right pre-
requisites to become an Islamic financial hub
Strong economic growth& international trade
Pool of talent andprofessionals in IF
Wide range of innovativeIslamic financial products
Comprehensive humancapital developmentinfrastructure
Strong Government
support
Diversified & advanced
Islamic financial markets
Conducive tax regime
Liberal investmentpolicies
Liberal foreignexchange rules
Dynamic legal,
regulatory and Shariahframework
Strong internationalconnectivity - well positioninterlinking Asia with the world
Mutual recognition ofShariah interpretations
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 11/1211
“from my perspective,Malaysia as a zone hasgood infrastructure andregulations for Islamicfinance …”.
Rushdi A. Siddiqui Director, Dow Jones Islamic
Market Indexes Interview with StarBiz, March 2007
“...Malaysia has always beenat the forefront of innovationof Islamic finance…Very early
on, Malaysia developed aninter-bank money system for
Islamic bonds…”
Professor Mahmoud Amin El- Gamal, University of Houston
Interview with BusinessWeek, October 2003
“Malaysia is a champion for thedevelopment of capital market-basedinstruments under Islamic law in the
form of sukuk”
September 18, 2007
“Malaysia allows for competitive Islamicinvestment that attracts even for non-
Muslim investors
(Ernst & Young’s Islamic Funds and Investments Report 2008)
7/30/2019 Malaysia Opportunities in Islamic Finance
http://slidepdf.com/reader/full/malaysia-opportunities-in-islamic-finance 12/1212
Thank You
www.mifc.com