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Rise in Malaysia's Islamic banking assets

According to the central bank, the country’s Islamic finance industry has grown to become a key segment in the financial system.
“This is a consequence of continuous initiatives to build a solid foundation focusing on infrastructural, institutional and capacity building measures, as well as robust regulatory and supervisory framework.
“These measures are the cornerstones of the Islamic finance industry’s growth,” said Bank Negara governor Datuk Muhammad Ibrahim at the launch of the Educator’s Manual on Shariah and Practical Operational Standards focusing on the Murabahah principle.
He said there were now 27 players offering more than 100 financial products compared with fewer than four Islamic banks and takaful players before 2000.
According to a recent report on Islamic finance assets, Malaysia, Saudi Arabia and Iran hold almost 65 percent of global Islamic assets last year.
However, the firm said the sukuk market had been struggling in the past couple of years due to the global economic uncertainty, which had caused lack of new players.
The sukuk market dropped to US$66 billion (RM264 billion) last year compared with US$101.8 billion in 2014, a performance that was not anticipated by market players after ending 2014 on a strong note.
“According to the sukuk perceptions and forecast study, the drop in sukuk market was also attributed to the cessation of short-term sukuk by Bank Negara, the world’s biggest sukuk market, holding approximately 50 percent market share,” said.
Muhammad also said Bank Negara would form a steering committee made up of representatives from the industry and academia to undertake a review and strategic positioning of Islamic finance education and research organisations.
The launch of the educator’s manual marked another milestone in Bank Negara’s target to enhance the quality of education, particularly on Islamic finance, he said.
The educator’s manual was jointly developed by the central bank and the International Shariah Research Academy for Islamic Finance and Islamic Banking and Finance Institute Malaysia.
Of the 14 syariah standards that are being developed by Bank Negara, Murabahah is the first series in the educator’s manual.
The manual for other contracts will be developed gradually. University Sains Islam Malaysia and University Islam Antarabangsa Malaysia have agreed to be the strategic partners for the manual.

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