Malaysia is managing some 30 percent to 40 percent of assets in the global Islamic financial system, amounting to 0.85 trillion U.S. dollars, and this may rise further through aggressive promotion and innovations, an industry expert said, local media reported on Tuesday.
Islamic Banking and Finance Institute of Malaysia chief executive officer Auk Dr Adnan Alias said assets managed by the Malaysian Islamic financial system may one day even surpass those of the local conventional banking system.
"It is possible, if we can attract 'petro dollars' from the Middle East and Africa, as well as demand for Islamic financial products and services through innovation," he told reporters after opening a 2-day 5th International Finance Conference in Kuala Lumpur on Monday.
"There are opportunities (for us to tap the funds and create more demand)," the New Straits Times quoted Adnan as saying.
The conference is jointly organized by Monash University and the Institute of Bankers Malaysia.
Over the past four years, Islamic finance assets have more than quadrupled to 0.85 trillion U.S. dollars, partly attributed to oil- driven financial liquidity and increasingly savvy Muslim consumers seeking more Islamic financial products.
The International Islamic Financial Services Board has predicted that assets managed under Islamic rules will almost triple to 2.38 trillion U.S. dollars by 2015. There are now 300 syariah-compliant financial services providers globally compared to only one in 1975.
Islamic financial instruments have also grown with the sales of Islamic bonds or sukuk, growing nine times faster than conventional corporate bonds last year. Standard & Poor's estimates that the sukuk market has reached 70 billion U.S. dollars and will top 160 billion U.S. dollars mark by the end of the decade.
Amid this projected rapid development, the Islamic financial sector faces several challenges, Adnan said.
These include adequate pool of talents; issues on products and services as well as being innovative; harmonization of Islamic banking, takaful and re-takaful and capital market; building capacity; and international financial integration.
In promoting Islamic finance, Adnan said Malaysia's approach is to harmonize Islamic banking, takaful and re-takaful and capital markets.
"We cannot grow one but have to grow three in tandem. Otherwise, the progress of the Islamic financial system will be slower," he said.
Source: Xinhua
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