KUALA LUMPUR (May 8): Malaysia continues to lead in the sukuk market with combined domestic and international issuances totalling US$612 billion from January 2001 to December 2017, according to the International Islamic Financial Market's (IIFM) latest annual sukuk report.
This compares with its peers such as Indonesia at US$63 billion, Saudi Arabia at US$95 billion and the United Arab Emirates at US$68 billion.
IIFM chief executive Ijlal Ahmed Alvi said barring Malaysia, the corporate sukuk issuances in most of the established jurisdictions is below expectation and challenges including legal and policy issues must be resolved to encourage more sukuk issuances by corporate entities.
“There is a degree of confidence in both established sukuk issuing jurisdictions, as well as new jurisdictions entering the sukuk market which is evident from longer dated sukuk ranging from 30 years to perpetual being issued," he added in a statement today.
“Malaysia has always played an important innovative role in Islamic financial services, boasting a comprehensive regulatory framework for Islamic banking, finance, Takaful and asset management," said Labuan Financial Services Authority director-general Danial Mah Abdullah.
“As an extension and in support to this, Labuan International Business and Financial Centre (IBFC) has also been an innovative bed for Islamic financial products. For instance, the introduction of Waqf embedded within a private foundation set up as a wealth management structure, through the Labuan International Waqf Foundation is a classic example of this innovation from Labuan IBFC.
"It is also home to the world’s first US dollar-denominated exchangeable sukuk. These have contributed to Malaysia’s position as the global leader in Sukuk issuance,” he added.
IIFM chairman Khalid Hamad said he expects the leadership of Islamic banks, as well as the regulators to encourage the use of IIFM standards in their jurisdictions, which will further enhance efficiency, reduce costs, promote best market practice and serve in the unification and harmonisation of the industry.
In support of the IIFM standardisation, Danial said, “The standards published by the IIFM has brought tremendous benefits to the industry by reducing legal and syariah compliance related costs, strengthening risk management capabilities, increasing efficiency, promoting syariah harmonisation and encouraging law reforms.
“These standards are not only utilised by financial institutions which are active in Islamic finance markets in the Gulf Cooperation Council, Africa, Asia and Europe but also by the regulators as reference for providing syariah-compliant facilities to Islamic financial institutions in their respective jurisdictions.”
Danial also encouraged more Islamic financial institutions to join IIFM and play an active role in deliberating and shaping the standards being developed by the IIFM to create a robust, transparent and efficient Islamic financial market through standard syariah-based financial contracts.