The rapid international expansion of Islamic finance reflects its ability to remain competitive and to increasingly meet the complex requirements of the global financial community.
With various countries now intensifying efforts to develop their respective Islamic financial capabilities, it is becoming increasingly vital to build deeper relationships between the key markets for Islamic finance and also between the leading industry players in each of these jurisdictions.
Central banks from seven Muslim countries yesterday launched a regulatory body to oversee the booming Islamic investment market. The Islamic Financial Services Board (IFSB) was inaugurated here by founding members Malaysia, Saudi Arabia, Indonesia, Iran, Kuwait, Pakistan, Sudan and the Islamic Development Bank.
Indonesia's shariah banking sector has been growing 40.2 per cent annually over the last five years, outpacing conventional banking's annual growth of 16.7 per cent over the same period.
Halim Alamsyah, deputy governor of the central bank, Bank Indonesia, expressed confidence that shariah banking would comprise 15 to 20 per cent of the country's banking industry in 10 years, from 4.1 per cent currently.
Global Islamic insurance sales rose nearly 20 per cent to US$8.3 billion (Dh30.48bn) in 2010, but opportunities still abound for further expansion, a new report has found.
Takaful contributions in the UAE grew by 28 per cent to reach $818 million during the year, said Ernst & Young's World Takaful Report 2012.
Global Islamic insurance contributions surged 19 percent in 2010 to $8.3 billion helped by Saudi Arabia, the world’s biggest oil exporter, which made up more than half the industry, an Ernst & Young report said.
The six-nation Gulf Cooperation Council, which also includes the United Arab Emirates, Qatar, Bahrain, Oman and Kuwait, made $5.68 billion of Islamic insurance or takaful contributions in 2010, and South East Asia $2 billion, according to the World Takaful Report 2012 e-mailed today.
Malaysian and Indonesian pension funds, which have a combined $192 billion of assets, say plans to increase holdings of Islamic bonds are being hampered by a shortage of investment-grade sukuk.
Kuala Lumpur-based Employees Provident Fund and Kumpulan Wang Persaraan (Diperbadankan), Malaysia’s two biggest pension managers, and PT Jaminan Sosial Tenaga Kerja (JAMSOS), Indonesia’s largest retirement fund, say they want more Shariah-compliant debt in order to diversify portfolios that must hold investment- grade securities.
Indonesia’s Shariah-compliant insurance assets increased by 32 percent to 9.2 trillion rupiah ($1 billion) in 2011 from a year earlier, according to data from the Capital Market and Financial Supervisory Agency.
Islamic insurance, or takaful, has grown by 50 percent on average in the last five years, the agency said in an e-mailed statement today. Takaful is based on the Koranic principle of mutual support where policy holders contribute a sum of money to a fund managed by the company for use in the event of a loss by one of its members.
Indonesia's finance ministry sold a record 13.6 trillion rupiah ($1.49 billion) in retail sukuk after receiving 19 trillion rupiah in demand, debt office chief Rahmat Waluyanto said on Monday.
The three-year retail sukuk has a coupon of 6.25 percent and can only be bought by individual investors who are Indonesian citizens. The ministry initially set an indicative target of 10 trillion rupiah.
Asia’s sovereigns have issued a slew of Sukuk in March; in a sure sign that government and government-related debt will continue to dominate the market this year.
Among sovereign and quasi-sovereign Sukuk that have been issued this year include a BN$100 million (US$79.29 million) short-term Sukuk Ijarah issuance from the Autoriti Monetari Brunei Darussalam, the monetary authority, on the 8th March. While remaining under the radar, this is the Brunei’s government 69th issuance of short-term Sukuk; amounting to BN$3.75 billion (US$2.97 billion)-worth of short-term Sukuk since April 2006.
Malaysia’s biggest Islamic insurers plan to expand in Indonesia, taking advantage of industry growth that’s almost three times the pace of their home market and increasing wealth in the world’s most-populous Muslim country.
Mayban Ageas, the nation’s largest insurer, is considering an acquisition in Indonesia, chief executive officer Hans De Cuyper said in a March 6 interview.
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