KUALA LUMPUR: Malaysian banks may have dominated the sukuk market but in value terms, the world’s top three sukuk managers, namely HSBC Group, Standard Chartered Plc (StanChart) and JPMorgan Chase, are ahead of any of the local top banks.
Second Finance Minister Datuk Johari Abdul Ghani said the country still lags behind global banks when it comes to international sukuk issuances and value despite accounting for 54 per cent of the global sukuk issuances.
He said local banks could not compete on this front because Malaysia lacks the presence of “Islamic mega bank”.
“Malaysia had in the last 12 months issued 25 of the 30 largest sukuk issuances which collectively totalled US$37 billion (RM154 billion) in value. Thirteen of these sukuk offering, which accounted for 36 per cent of the value for top 30 sukuk issuances, were domestic offerings,” said Johari at the 7th Muslim World Biz 2016, here, yesterday.
“Domestic banks, particularly Malaysian banks, dominate the league table sukuk managers. However, when it comes to the international offerings, it is the international global banks that dominate.”
He said the total value of the sukuk managed by HSBC, StanChart and JPMorgan was more than any of the top Malaysian banks.
“As far as the global sukuk issuances are concerned, ours, at 54 per cent of total issuances, is significant. However, in terms of fund, conventional banks are managing much bigger fund.
“In the banking system, we need size. The bigger the better for you to do more creative financing. The bigger you are, you can take more risk and pricing also becomes more competitive to provide the financing to the world. As of now, Malaysia does not have that,” he added.
Meanwhile, Johari urged the 57 member states of the Organisation of Islamic Cooperation (OIC) to consolidate their capabilities to produce higher global gross domestic product (GDP).
The collective GDP for OIC member countries as of end-2014 was US$16 trillion. While this was significant, he said it is still lower than the United States’s GDP of US$17 trillion.
“For an organisation with around 20 per cent of the world population, the OIC countries have only produced 15 per cent of the world’s total GDP. There is more to be done to grow our economies, particularly in engendering greater international trade to better reap the benefits of globalisation.”
On the 2017 Budget, Johari said he was confident a balanced budget could be achieved by 2020, but that some sacrifices had to be made.
“We will, however, have to sacrifice a lot of things as we need to ensure that each ringgit the government spends will have to be beneficial to the rakyat, with no wastage. It is imperative that we practise this as failing to do so will further increase our budget deficit,” he added.