Tuesday April 10, 2007

Malaysia needs to look beyond being hub for Islamic finance

By Susan Tam

KUALA LUMPUR: Malaysia needs to market itself as a global brand for Islamic finance and aim to be an Islamic finance centre for excellence to capture international attention.

Dow Jones Indexes Islamic Market Index Group global director A. Rushdi Siddiqui said Malaysia needed to go beyond developing itself as a hub for Islamic finance.

Speaking to Starbiz on the sidelines of the recent Global Islamic Finance Forum, he said a country aiming to tap opportunities in Islamic finance should move from being a zone to a hub.

Following that, it should achieve a cluster status and finally establish itself as a COE, he added.

A. Rushdi Siddiqui
“From my perspective, Malaysia as a zone has good infrastructure and regulations for Islamic finance and participation from foreign players such as Al-Rajhi and Kuwait Finance House,” he said.

However, he said, the question remained whether these players were staying in Malaysia or using the country as a platform to enter the mass markets of China and Indonesia.

Rushdi said in a hub status, a country could consider implementing international standards for syariah and also setting up an Islamic mega bank.

“At a cluster level, the country can grow its halal industry, involve Islamic management principles and the academia as well as ways to tap the non-Muslim money,” he said.

From the cluster level, he said, Malaysia could then develop and market its specialisation or niche areas in order to tap the liquidity from the Gulf states.

“Malaysia recognises that it needs to do more and that is positive for the market.

“But the question is how will players and regulators build and expand from here. Malaysia needs to be branded as a global brand,” he added.

Citing Dubai as an example, Rushdi said that country was a latecomer into the Islamic finance scene but it was fast grabbing international attention.

“Be it the airlines and property sector, monies and people are migrating to Dubai due to the latter's marketing efforts of making the country a global brand,” he added.

Rushdi also said Malaysian players were forming structures accepted internationally, benefiting the market, but size would be an issue here.

“The issue is whether the market is big enough to absorb the multi-billion dollar funds from the Gulf, be it for real estate, REITS, acquisitions or private equity,” Rushdi pointed out.

On marketing Malaysia globally in Islamic finance, Rushdi also said the Dow Jones Indexes was keen to work with Bursa Malaysia to set up Islamic Exchange Trade Funds (ETFs), which would help raise Malaysia's profile in the Gulf.

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