Distinguished guests, Ladies and Gentlemen, A very good morning to all and wish all our Muslim participants “Selamat Berpuasa”. |
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INTRODUCTION |
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| 1. | First and foremost, I would like to thank the Malaysian Financial Planning Council (MFPC) for graciously inviting me again to deliver the keynote address at this eighth MFPC e-Conference. |
| 2. | It has been quite remarkable how we have adapted to online communication tools in a very short span of time. And, in the case of this event, isn’t it amazing that it has enabled more than 700 participants to converge virtually, without violating social distancing SOPs. |
| 3. | Technological change and adoption will be a defining trend for the years ahead, with implications for our markets and economy. As part of my remarks, I would like to share some thoughts on:
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MALAYSIA’S MARKET LANDSCAPE AMID COVID-19 |
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| 4. | The ongoing pandemic has disrupted the way in which we interact socially as well as in our business transactions. The capital market is no exception, with a notable shift in investor behaviour and adoption of digital tools and services. |
| 5. | Over the past year, as most of you are aware, global stock markets witnessed a resurgence in retail participation. Similarly in Malaysia, we have also seen a marked increase in retail interest, not just in stocks and shares but in digital offerings as well. This includes equity crowdfunding (ECF), peer-to-peer (P2P) financing, digital assets and digital investment management services. |
| 6. | In fact, our licensed digital investment managers (DIM) have collectively grown their client base by more than eight times, with total assets under management amounting to RM466 million as at end December 2020. |
| 7. | These digital offerings have made inroads, as technology has provided a convenient and cost-effective solution for investors and issuers alike. Complemented by a growing number of alternative platforms and providers, this ease, of access via digital tools and mobile devices has attracted the young (as well as those young-at-heart). |
| 8. | Therefore, it is also important to embark on a digital transformation journey to achieve greater client servicing and efficiencies in the provision of financial advice. A priority of the industry’s 3-year Joint Action Plan1, which I shared in last year’s keynote, is to enhance digital capabilities and improve its positioning. It also recommends the establishment of an industry-wide digital technology committee to ensure smooth digital adoption for financial planners. |
DRIVING SHARIAH INNOVATION FOR THE ISLAMIC DIGITAL ECONOMY |
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| 9. | Greater technology adoption, has also the potential to transform the Islamic capital market (ICM) and provide solutions to enhance existing processes whilst encouraging innovation in new segments. |
| 10. | Last year, the first ever digital sukuk – ‘Sukuk Prihatin’ - was issued by the Malaysian government. As a digital milestone, subscription to the sukuk was solely through digital banking platforms; utilising JomPAY and DuitNow facilities. This was another ‘feather in the cap’ for the country’s Islamic digital economy and sustainability agenda. |
| 11. | We hope to see many more Shariah offerings leveraging fintech for sustainable and responsible investments (SRI) and Islamic social finance. |
| 12. | Another interesting area of growth for fintech will be digital-based asset offerings. In 2020, the Shariah Advisory Council (SAC) of the SC resolved that Digital Assets are recognised as asset (mal) from a Shariah perspective, with the trading of digital assets on regulated digital asset exchanges permissible. This ground-breaking resolution is expected to facilitate greater product innovation in digital assets, and in turn, attract broader participation in this new asset class. |
| 13. | As we expand the boundaries of the Islamic digital economy, it is essential to enhance awareness through engagements to widen inclusion. Earlier this month, the SC held the inaugural Islamic Fintech Engagement Series. The session entitled “Digital Assets: Conversations on the SAC Resolution” attracted broad participation across the spectrum of fintech, Islamic and existing industry players. |
| 14. | We believe such engagements have the capacity to breed collaborative ideation of Shariah fintech, and sustain the vibrancy of Islamic finance and the digital economy. |
FINTECH AND MALAYSIA’S ICM |
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| 15. | Much of the fintech developments locally have focused on alternative platforms and digital-only services. Having a structured regulatory framework in place has clear benefits. Specific guidelines, such as the Guidelines on Recognised Markets, provide regulatory clarity; guiding innovation within this space. |
| 16. | Although the number of Islamic providers in digital platforms and services is still small in comparison to the overall industry, we are encouraged by its progress given the industry’s relatively short history. |
| 17. | Looking at ECF and P2P, there is at least one specialised platform operator in each segment2 offering Islamic campaigns. In addition, the SC has cleared applications from four Recognised Market Operators (RMOs) that incorporate Shariah requirements in their rulebook. |
| 18. | In 2019, the international fund management company Wahed Technologies received a licence to undertake Islamic fund management activity through a robo-advisory platform. With seven licensed and fully operational digital investment managers3 including Wahed, we hope to approve more providers that offer Islamic products. |
| 19. | The government also continues to recognise and support Islamic finance, wherein Budget 2021 provided a tax relief of up to RM7,000 per year for individuals who intend to pursue their studies in Islamic finance, regardless of the level of studies. The tax relief serves to encourage amongst others, graduates to undertake professional certification in Islamic finance. |
CLOSING REMARKS |
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| 20. | The past year has taught us the value of staying safe to protect others. For licensed professionals such as yourselves, I would also like to remind you on the value of protecting and keeping your clients’ investments safe. |
| 21. | Continue to provide good and sound advice for your clients’ financial well-being. And adopt greater use of technology to raise your game. |
| 22. | With technology’s help and all-round market collaboration, we can cement Malaysia’s move towards becoming an Islamic fintech hub and benefit from the opportunities provided. |
| 23. | On that note, I would like to express my deepest appreciation to the organisers and everyone present here today. Have an interesting and vibrant discussion ahead. Thank you. |
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