Launch Of “The Malaysian Sukuk Market Handbook…Your Guide To The Malaysian Islamic Capital Market”

Assalamualaikum Warahmatullahi Wabarakatuh,

Salam Sejahtera

Bismillahir Rahmanir Rahim

Beta bersyukur ke hadrat ILAHI kerana dengan izin dari Nya, Beta dapat berangkat untuk melafazkan titah di persidangan pada petang ini.

  1. It is a pleasure for me to be here this afternoon to launch ‘The Malaysian Sukuk Market Handbook’ by RAM Ratings. This Handbook is a timely addition to the efforts currently underway to establish Malaysia as an international Islamic financial center.
  2. We are living in turbulent times. In many respects, the global economy today is in uncharted territory as world leaders struggle to come up with solutions to the financial and economic crisis. We may have prevented a world depression but already several countries are in recession.
  3. There is much talk these days about the creation of a new international economic order. Some world leaders have called for a Bretton Woods II. There is growing consensus that the unregulated capitalism that has led us to this crisis needs to be reconfigured to provide greater resilience and stability to the financial system.
  4. In times like these we can do no better than to return to basic principles. It is in this context that we in Malaysia see tremendous potential for Islamic finance. The current financial turmoil provides an opportunity for Islamic finance to position itself as a viable alternative to conventional finance by providing investors with other asset classes and markets that provide stability.
  5. The strengths of Islamic finance are derived from syariah principles, which also happen to be sound business principles. The syariah injunctions require that financial transactions be accompanied by an underlying productive activity thus giving ride to a close link between financial and productive flows.
  6. Syariah principles prohibit excessive leverage and speculative financial activities thereby insulating the parties involved from too much risk exposure. It is worth speculating to what extent the world financial crisis could have been averted, or at least its impact considerably reduced , if the principles of Islamic finance had been more widely practiced.
  7. Be that as it may, there is now greater awareness and interest among the world financial community of the merits of Islamic finance. There is already growing demand for Islamic financial products in the global market, far exceeding their supply.
  8. In recent years, we have witnessed a rapid expansion of the Islamic financial services industry. Today Islamic finance is fast becoming an accepted component of the global financial system. Malaysia’s direct involvement in the development of Islamic finance has significantly transformed the financial landscape at both the national and international levels, making the country a leader in the international race to become a major Islamic financial centre. The vibrancy and dynamism of Malaysia’s Islamic financial system today is reflected in its continuous product innovation, diversity of Islamic financial institutions, comprehensive regulatory and legal infrastructure, as well as the availability of Islamic finance talent and expertise.
  9. Malaysia has the distinction of being the first country in the world to have a full-fledged Islamic financial system that operates alongside a conventional one. Current syariah-based assets constitute almost 18 per cent of total assets in the country’s financial system. This is expected to hit 20 per cent by 2010. In the equity market, syariah-approved counters represent more than 85 per cent of the total number of listed companies on Bursa Malaysia.
  10. The Malaysia International Islamic Financial Centre (MIFC) was launched in August 2006 as part of our initiative to globally integrate Malaysia within the international Islamic financial community. Sukuk origination and distribution has been identified as one of the five pillars that will solidify our position as an international Islamic finance hub. The other four pillars are; Islamic Fund and Wealth Management; International Islamic Banking; International Takaful Business; and Human Capital and Thought-Leadership.
  11. Under the MIFC, service providers are welcomed to use Malaysia as a platform for Islamic finance activities, leveraging on the comprehensive system and conducive environment available in this country. Incentives include new licenses for conducting foreign currency businesses, attractive tax incentives and facilitative immigration policies. These measures have been designed to provide operational flexibility, cost efficiency and an encouraging environment, making Malaysia even more attractive to foreign investors.
  12. The Islamic capital market in Malaysia today offers a wide range of retail and wholesale products such as syariah-compliant stocks, Islamic unit trust funds, Islamic exchange traded funds or ETFs, syariah-compliant real estate investment trusts or REITs, structured products and derivatives. These world- class financial products are available in both ringgit and non-ringgit currencies.
  13. With regard to sukuk, the country has not only achieved several industry “firsts”, but has also successfully developed a deep and liquid market. We can lay claim to being the world’s largest and most innovative sukuk market. At end 2007, total sukuk originating from Malaysia amounted to RM213 billion (USD62 billion), constituting 68.9 per cent of the global sukuk outstanding. In the same year, the world’s largest sukuk, amounting to RM15 billion (USD5 billion), was raised in the Malaysian sukuk market. Following the liberalisation of our foreign exchange administration rules, several foreign development banks, quasi-sovereign agencies and multi-national corporations have joined our local corporations in tapping the local sukuk market for funds. The rapid growth of the sukuk market has been nothing short of remarkable. As a pioneer, we have set standards and provided leadership by example on many fronts.
  14. This Handbook will serve as a guide to institutions and professionals, particularly those from the international community who are keen on making the most of the Malaysian capital market for creating and transacting in sukuk.
  15. May I take this opportunity to congratulate RAM Ratings on this outstanding initiative in producing the Malaysian Sukuk Market Handbook. Together with our other efforts, we are optimistic that Malaysia is not far away from achieving the status as the leading centre for Islamic finance.
  16. It now gives me great pleasure to launch the Malaysian Sukuk Market Handbook.

Wabillahi taufik Walhidayah

Wassalamualaikum Warahmatullahi Wabarakatuh.


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