Malaysia leading in global sukuk

KUALA LUMPUR: Malaysia has grown its sukuk rapidly and is now leading in global sukuk.

Deputy Prime Minister Tan Sri Muhyiddin Yassin said Malaysia had grown its sukuk from US$1.5bil (RM4.8bil) of the global outstanding amount in 2001 to over US$148bil (RM473.7bil) in June this year.

This accounted for 60.4% of the outstanding global sukuk, he told the 10th Kuala Lumpur Islamic Finance Forum 2013 yesterday.

He added: “Being a conducive environment for sukuk transactions, I certainly believe that Malaysia has what it takes to attract more institutions from all regions of the globe aiming to tap Malaysia’s Islamic finance marketplace and the pool of liquidity.”

Muhyiddin said the sukuk market had become a major contributing factor in the internationalisation of Islamic finance.

He noted that global sukuk issuance last year had surpassed that of 2011 by more than 50%.

Despite the volatility in global bond markets and concerns over monetary policy in the United States, the global sukuk market had shown resilience in the first half of this year – with US$61.2bil (RM194.7bil) worth of sukuk papers domiciled in more than 20 countries, he said.

He credited Bank Negara, Securi­ties Commission, Syariah scholars and the Islamic financial industry community with bringing Malaysia’s Islamic finance marketplace to the current sophistication level.

According to Bank Negara, Islamic banking assets totalled RM527.2bil or 24% of the banking system’s total assets in the first six months of this year compared with just 12.1% of the market share in 2006.

Muhyiddin said the new Islamic Financial Services Act 2013 had been put in place to promote Syariah governance, practices and implementation.

An institution could be fined up to RM25mil and individuals could be jailed up to eight years, apart from being fined, if found to be violating Syariah principles when operating an Islamic financial transaction, he said.