Welcoming Address




Tan Sri Zarinah Anwar
Securities Commission Malaysia


at the


Mutual Recognition Agreement on Development of Islamic Capital Market and Islamic Collective Investment Schemes


9 November 2009
Securities Commission


Yang Berhormat Dato’ Seri Ahmad Husni Hanadzlah, Second Finance Minister, Malaysia

Miss Au King Chi, Permanent Secretary for Financial Services & the Treasury, government of the Hong Kong Special Administrative Region

Dr Eddy Fong, Chairman, Securities and Futures Commission Hong Kong

Distinguished guests

Ladies and gentlemen


Good morning and welcome to the Securities Commission. First of all let me extend a warm welcome to Malaysia and to the SC, to Miss Au King Chi and to our colleagues from the Hong Kong SFC led by Chairman Dr Eddy Fong.


Ladies and gentlemen, we are very honoured and pleased to have with us today Yang Berhormat Dato’ Seri Ahmad Husni Hanadzlah who has graciously agreed to officiate at today’s signing of a mutual recognition agreement for the development of Islamic Capital Markets and Islamic Collective Investment Schemes between the Hong Kong Securities and Futures Commission and the Securities Commission, Malaysia. I am also heartened by the presence of many key players from the Malaysian capital market – for as we all know, while regulators can build linkages and regulatory bridges, the decision to travel on them rests solely with the intermediaries.


The SC Malaysia and the Hong Kong SFC have long established a strong and enduring regulatory relationship – working together in areas ranging from investigation and enforcement to regulatory reform and capacity building. This mutual recognition arrangement (MRA) that we are signing today therefore marks another milestone in our relationship – opening a new chapter with a platform for cross-border offering of Islamic Collective Investment Schemes.


For the Islamic capital market to thrive in the global arena, it needs a diversity of players with the courage and foresight to venture beyond national borders. After all, our experience in Malaysia has proven that Islamic financial products have universal appeal. Apart from catering to the specific needs of Muslim investors, these products are increasingly becoming the focus of investors who are looking for new asset classes, new instruments and new products that are transparent, founded on strong ethical principles and premised on a focused approach in managing risk.


After more than three decades of organic growth, Islamic finance in Malaysia is now increasingly playing a leading role in the international financial arena. In the capital market space, we have built our strengths in key areas like sukuk issuance, funds management, shariah compliant equities and collective investment schemes. Our annual Islamic Markets Programme and biannual International Islamic Capital Market Forum now attract speakers and participants from across the globe. Our publications on the Islamic Capital Market in particular the Resolutions of our Shariah Advisory Council are in great demand and have been translated into several languages – though not yet in Mandarin. But we are pleased to note that the principles and rulings pronounced by Malaysia’s Shariah Advisory Council in relation to Shariah requirements have been accepted and re-affirmed by their use as a benchmark by Hong Kong in developing its own Islamic capital market.


Building linkages and facilitating cross border activities are important aspects of internationalising the Islamic capital markets. In this regard, while we do not underestimate the size, significance and influence of countries in the Middle East, consistent with our philosophy of mainstreaming Islamic Finance, we strongly believe that lingkages should also be established with key financial centres.


Hong Kong is one of the most established international financial centres in Asia. For Islamic finance, Hong Kong can serve as a gateway not only to China but also to the other financial centres of the world. Furthermore, the close ties between our people are reflected by the close links between our capital markets, with the presence of our investors and intermediaries in each others’ markets. We also share a common legal heritage with our corporate and securities laws for instance, having many common aspects. It is therefore most fitting that having entered into an MRA with the Dubai Financial Services Authority, we now look towards Hong Kong.


The Mutual Recognition Agreement between the HKSFC and SC Malaysia will allow Malaysian investment management companies to be recognised by the HKSFC while Islamic funds from Malaysia will be deemed to have substantially complied with the Hong Kong Code on Unit Trust save for some additional disclosure requirements. The same applies for Hong Kong investment management companies and Islamic funds to be offered in Malaysia.

Ladies and gentlemen


Demand for Shariah-compliant investment management products is growing world-wide. In fact it is the fastest growing segment in our capital market, expanding at a rate of 24% annually, with Malaysia being home to more Islamic funds than anywhere else in the world. Recognising our strength in this area, Malaysia has recently fully liberalised our Islamic fund management industry and made available a wide range of tax and other incentives to attract international players. It is our hope that with the signing of the Mutual Recognition Agreement, both Malaysian and Hong Kong-based firms will quickly tap the opportunities for cross-border distribution of Islamic funds.


The MRA also provides for collaboration and cooperation in the area of capacity building. In this regard, Malaysia is committed to sharing our experience in the area of Islamic capital markets with our colleagues from Hong Kong just as we know that there is much that we in Malaysia can learn from Hong Kong in our aspiration to be an international financial centre in the Islamic arena.


Ladies and gentlemen, the support of the government has been a significant element in the growth of Islamic finance in Malaysia. This is demonstrated again today by the gracious presence of Dato’ Seri Ahmad Husni Hanadzlah at this very significant event. Thank you YB for your support.


I also wish to thank once again Miss Au King Chi in representing the Hong Kong government, and Dr Eddy Fong and the delegates from the HKSFC for making the journey to Kuala Lumpur for the signing of mutual recognition agreement. I would also like to thank the staff of both HKSFC and SC Malaysia who have worked long and hard to make today’s event a reality. As regulators, we can only build the regulatory bridge between our two markets. The onus is now on our intermediaries to quickly seize the opportunities that have now been made available to them.


Thank you