KUALA LUMPUR: Islamic finance in Asia is expected to grow more than 20% this year driven by liquidity from high oil prices and the issuance of more Islamic financial products, said global syariah consultancy Yassar Ltd’s chief executive Majid Dawood.
He said Middle Eastern countries, which have especially benefited from high oil prices and are mainly channelling their funds towards infrastructure development, would take the Islamic finance route to finance projects. Islamic finance grew 20% last year.
Majid said Yassar had seen many new products emerging or were in the pipeline, in compliance with new standards set by the various international syariah supervisory boards.
Speaking to reporters after an FTSE luncheon briefing on Islamic finance in Asia here yesterday, he said the Islamic finance market had had to review syariah compliance standards due to the emergence of questionable products.
Majid added that 85% of sukuk issued last year were found not to be syariah-compliant. He expected more Islamic finance products, especially sukuk issuances, to come onstream in the second quarter of this year, as issuances, which had been held back due to compliance concerns, would be offered having been realigned with new standards.
He said with 76% share of total banking assets, 95.5% of sukuk issuances and 83% of takaful assets of Asian Islamic financial services, Malaysia was in a good position to go global in the development of the Islamic finance sector.
He added Malaysia had benefited from the high take-up of Islamic finance, gaining exposure and experience in the sector.
Majid said Islamic finance had seen a limited impact from the United States’ subprime crisis, especially in the Middle East and Malaysia, which had been boosted by domestic investments.
He also said standardisation in Islamic finance rules had been held back by the different interpretations of the rules by syariah boards, and the sector would need to see more standardisation if it was to move forward.