‘Too few syariah-compliant securities’

New Straits Times - - Business -

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.

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