MALAYSIA continues to be a trailblazer in the global Islamic finance sphere, with Prime Minister Datuk Seri Najib Razak proposing the listing and trading of Malaysian Government Securities and Government Investment Issues on the exchange-traded bond and sukuk (ETBS) platform in 2015 Budget.
The ETBS, first introduced in January 2013, was designed to boost domestic sukuk and bond issuances as well as trading. It is also expected to strengthen Malaysia’s status as the world’s number one sukuk-listing domicile of the world.
“From a profiling perspective, this is a huge move for the country’s Islamic finance sphere as it will put us in the number one spot for sukuk-listing domicile ahead of London and Luxembourg,” CIMB Islamic Bank Bhd chief executive officer Badlisyah Abdul Ghani said yesterday.
According to Badlisyah, the proposal has been a long time coming as the government is looking towards introducing more equity and venture capital offerings into the Malaysian Islamic finance landscape.
“Bursa Malaysia is already the largest Islamic stock exchange in the world with 80 per cent of its listings syariah-compliant. We are also the world’s largest sukuk issuer and this proposal will help boost our equity and venture capital offerings.
“This announcement demonstrates yet again the Malaysian government leadership in paving the way in Islamic finance. The proposal for issuers to list their papers for greater transparency will further boost the local Islamic finance capital market liquidity.
“But, of course, this is still in the experiment phase and it remains to be seen on how it will impact the price discovery,” he said.
Maybank Islamic Bhd chief executive officer Muzaffar Hisham lauded the government’s proposal to continue deducting expenses incurred in the issuance of sukuk based on ijarah and wakalah principles till 2018.
“The prime minister’s decision to extend until 2018 the deduction of expenses incurred in the issuance of sukuk based on ijarah and wakalah principles underscores the government’s commitment to continue developing the local sukuk market,” he said.
“The sukuk market in Malaysia has benefited tremendously from the government’s visionary and market-friendly policies in the past. And we at Maybank Islamic are confident that Malaysia’s leadership in this space will be maintained.”
The government also introduced the Investment Account Platform, a new syariah-compliant offering that will provide opportunities to investors in financing entrepreneurial activities and development of small and medium enterprises as well as attracting new sophisticated investors.
It will be implemented with a start-up of RM150 million.