KUALA LUMPUR (Nov 24): Malaysia's market competitiveness is increasing but one of the ways it could further extend its global reach is to have a strategic focus, potentially on Islamic finance. 

"The reality is there is a firm base in Islamic banking success in a niche that can very well serve as a platform for leading innovation in other Islamic and conventional aspects of the capital markets here,' said PricewaterhouseCoopers Strategy and (Malaysia) Sdn Bhd director for financial services in Southeast Asia, Winston Nesfield.

Malaysia's Islamic capital market has tripled since 2000 to RM1.5 trillion, and is the world's largest sukuk market, accounting for 69% of global sukuk issuances in 2013. 

Malaysia is a high growth market for both equity and debt asset classes and had a better balance of the two, compared to other more equity focused emerging markets, Nesfield said during the 19th Malaysian Capital Market Summit today.

He also said about 50% of Malaysia's asset growth would likely come from new sectors. 

"The Malaysian market however, is very domestically driven and that is something that needs to be looked into to increase attractiveness. Liquidity in the market also needs to be improved," he said. 

Nesfield also said Malaysia had a strategic choice in broadening the number and sub-segments of asset classes it invests in to compete with mid-market players. 

"It also has the choice of focusing its development policies and incentives on certain areas and gradually move towards becoming a financial centre that can compete globally,' he said. 

As to how Malaysia could leverage on its strength and leadership position within the Islamic finance market to drive capital market growth, Nesfield said there are some areas for potential growth and innovation. They include becoming an alternative hub for Islamic high net worth investors, becoming an Islamic issuance or organisation hub, and creating a Shariah compliant infrastructure hub.