Malaysia To Be Developed As International Platform For Shariah Compliant Asset Listing

KUALA LUMPUR, Dec 22 (Bernama) -- The government will develop Malaysia as an international platform for the listing and trading of Shariah-compliant asset classes. The move is part of Bank Negara Malaysia's (central bank) effort to optimise the country's potential as a global Islamic financial market platform. This will be done through collaboration with other regulatory agencies, said the central bank in the Financial Sector Blueprint 2011-2020 released here Wednesday. To tap the country's full potential in Islamic finance, the central bank also proposed to establish links with commodity exchanges in other jurisdictions and explore the use of different types of commodities as underlying assets. Besides, BNM said efforts would be focused on intensifying the internationalisation of Islamic finance. That includes strengthening the Islamic financial eco-system to mobilise increasing volumes of international Islamic financial flows and support diverse range of players and innovative Islamic financial instruments. In addition, the central bank said there was a need to further develop and enhance institutional structures including the legal and shariah framework to support Islamic financial transactions and further advance thought leadership in Islamic finance, for example, via establishing a single integrated shariah advisory council. BNM would also issue new Islamic banking and takaful licences only to institutions with specialised expertise to provide diversity of players in the market that can offer wider range of financial Islamic products. To increase market efficiency, the central bank recommended to develop a new set of facilitative standard agreements for financial market instruments, as well as, recognise qualified foreign currency instruments as liquid assets and eligible collateral for liquidity support. In making Malaysia a reference centre for Islamic financial transactions, BNM also recommended the establishment of a single legislated body as the apex authority on shariah matters. Besides, it also wanted the Malaysian legal system to be developed in order to gain recognition for international Islamic finance transactions. The central bank said these recommendations would collectively promote enhancing varying value propositions of Islamic finance and Malaysia as an international Islamic financial centre. In the immediate to medium-term, the implementation of the recommendations will focus on enhancing the capacity of financial institutions, improving market liquidity and connectivity, thus stimulating cross-border market activities. As for the medium to longer-term, issuance of specialised licences will be introduced to allow new entrants into the Islamic finance industry to address gaps in certain Islamic banking and takaful business segments. On the international front, Malaysia has evolved to become an international Islamic financial centre and ranked highly in various global indices relating to Islamic finance, one of it being the largest sukuk (Islamic bond) market in the world accounting for 65 per cent share at US$96 billion in 2010. -- BERNAMA