Malaysia Continues To Drive Growth In Global Islamic Finance - S&P Global Rating

By Zairina Zainudin KUALA LUMPUR, Aug 17 (Bernama) -- Malaysia will continue to be one of the major markets to drive growth in global Islamic finance and this is expected to remain in the next few years, said Standard and Poor’s (S&P) Global Rating. Global head of Islamic finance Dr Mohamed Damak said the global Islamic finance assets are expected to grow by 10 per cent in the next 12 to 24 months in view of high interest from investors. He said the Islamic finance industry can unlock growth opportunities in three main areas, namely pragmatic standardisation, environmental, social and governance alignment, as well as digitalisation, particularly for sukuk. “When you look at the structure of the industry, it is concentrated in oil exporting countries like the Gulf Cooperation Council and Malaysia. “Given the increase in oil price and economic recovery post-pandemic, we expect to see some growth in the Islamic banking assets in these countries,” he told Bernama on the sideline of the 17th Kuala Lumpur Islamic Finance Forum 2022 (KLIFF) Tuesday. Earlier, Mohamed delivered a special presentation titled Global Islamic Finance Outlook 2022-2023 at the forum, which was attended by almost 500 participants and exhibitors, involving bankers, students, lecturers, directors and top management from various countries. In 2021, Islamic finance assets reached US$2.5 trillion (US$1=RM4.47), excluding Iran, driven primarily by the growth of banking assets and sukuk issuances. Mohamed said the industry’s concentration in the oil exporting countries coupled with the complexity of transactions and standards, however, deterred investors' appetite and prevented the industry from a significant expansion beyond its original turf. On sukuk, Mohamed said the issuances would likely not recover this year and the growth is expected to be slower to US$130 billion against US$147.4 billion in 2021. Total sukuk issuances in the first half of this year have dropped to US$74.5 billion compared with US$93.3 billion during the same period last year, he said. “We believe shrinking global liquidity, increasing complexity related to regulatory standards, and lower financing needs in some core Islamic finance markets will hold back issuance for the remainder of the year,” he added. -- BERNAMA