International delegates commend Malaysia’s active role in ICM capacity building-SIDC programme plays strategic role in promoting Malaysia as global ICM hub

Malaysia’s position as a global Islamic Capital Market (ICM) hub received a boost with the successful organisation of a high-level workshop to promote ICM knowledge transfer and sharing of expertise among skilled market professionals.

Delegates who attended the 5-day ‘Islamic Markets Programme’ (IMP) organised by the Securities Industry Development Centre (SIDC), the training and education arm of the Securities Commission (SC), lauded Malaysia’s key role in ICM capacity development. The programme ran from 10-14 July 2006.

“Human capacity building must be accorded high priority in development efforts to accelerate ICM growth,” said General Manager and Head of SIDC, Hasnah Omar in her welcoming remarks.

“The ICM industry needs to be equipped with a new breed of innovators, regulators, intermediaries and risk managers who have the right blend of capital market knowledge and understanding of Shariah principles. There is a need for global sharing of expertise and funding for training and development programmes to create a pool of ICM professionals,” she said.

Hasnah added, “The ICM industry offers vast growth potential, and in tandem with Malaysia’s development as a global ICM hub, SIDC will continue to lead regional efforts to further educate market participants and create greater awareness of ICM.”

Dr Mohd Daud Bakar, an SC Shariah Advisory Council (SAC) member and President of the International Institute of Islamic Finance Inc. (IIIF), was the principal for the IMP. “Islamic finance manifests itself in many dimensions which are later translated into sophisticated financial products and services. A structured training programme in this area of development is a welcomed effort to seriously develop resources and expertise in this niche area,” he said.

Senior Executive Director of Strategy and Development Dr Nik Ramlah Nik Mahmood who spoke on ICM regulatory philosophy said, “It is important that market players understand how ICM regulation works and the objectives of securities regulation in balancing the function of developing and regulating the capital market.

Developmental efforts such as capacity building, infrastructure, growth incentives, innovation and competitiveness must support the fundamental regulatory principles of investor protection, systemic risk reduction and fair, efficient and transparent markets,” she continued.

Thirty-one participants from Brunei, Indonesia, Japan, Qatar as well as Malaysia attended the annual high-level programme which covered the fundamentals of ICM as well as Islamic risk management, global ICM developments and regulatory philosophy. Delegates found the progressive learning format conducive to a dynamic exchange of ideas which enabled them to keep abreast with emerging trends and developments and enhance their knowledge of new products and services.

The rapidly developing Islamic capital market has emerged as a key area of growth offering a variety of increasingly acceptable products, infrastructure, institutions, intermediaries and investors in the international markets.

Delegates were informed by prominent speakers that today there are more than
250 Islamic financial institutions in the world, with capitalisation in excess of
USD13 billion. This includes banks, mutual funds, mortgage companies and takaful organisations. The pool of money held by Muslims is estimated at USD1.5 trillion while demand for global Islamic mutual funds has also increased significantly. There are now more than 100 Islamic funds worldwide managing assets in excess of USD5 billion.

In Malaysia, ICM products and services have become an integral part of the capital market landscape, with 71% of bonds approved by the SC in 2005 structured as Islamic bonds or sukuk. In addition, 80% of the stocks listed on Bursa Malaysia are classified as Shariah-compliant securities by the SC’s SAC. This has provided the impetus for further ICM growth, reflected by the continued increase in the numbers of Shariah-based unit trust funds, issuance of innovative Islamic bond structures using various Shariah underlying principles, and introduction of new ICM products such as Islamic Real Estate Investment Trusts (REITs).