‘Too few syariah-compliant securities’
KUALA LUMPUR: There is a need to list more Islamic financial institutions on Bursa Malaysia so as to boost the Islamic fund and wealth management industry.
Permodalan Nasional Bhd (PNB) group chairman Tan Sri Abdul Wahid Omar said this would also strengthen Malaysia’s position as a global hub for such funds.
He said of the 672 syariah-compliant securities listed on the local bourse, only two were from the finance sector, namely BIMB Holdings Bhd and Syarikat Takaful Malaysia Bhd.
“The finance sector has the lowest number of syariah-compliant listed securities available.
“It also places the percentage of syariah-compliant securities under the sector at only six per cent,” he told the International Islamic Fund and Wealth Management Forum, here, yesterday.
Wahid said the shortage of listed Islamic finance institutions could pose big challenges to the industry, especially for government-linked investment companies (GLICs) such as PNB, Tabung Haji and the Employees Provident Fund (EPF), as they were expected to provide syariah-compliant dividends to Muslim investors.
As such, it was impossible to provide competitive returns if the GLICs had to avoid investing in the financial sector as only six per cent of syariah-compliant securities were listed on Bursa Malaysia, he said.
He suggested three possible ways to grow the industry. The first is the formation of a second listed Islamic universal banking group, apart from BIMB Holdings, that could be anchored by Malaysia Building Society Bhd (MBSB), Bank Muamalat Malaysia Bhd, Malaysia Industrial Development Finance Bhd (MIDF) or one of the larger foreign-owned Islamic banks.
The listing of Islamic Development Finance Institutions, such as Bank Simpanan Nasional and Bank Rakyat, was a second option, he added.
The third approach would be the creation of a separate listing of “Islamic” or “i-share” among banking groups with sizeable Islamic finance activities embedded within them, such as Malayan Banking Bhd, CIMB and RHB Bank Bhd.