KUALA LUMPUR: The global Islamic funds market faces favourable prospects as several growth drivers are expected to bring it to the next stage of development.
According to Zainal Izlan Zainal Abidin, managing director, development & Islamic markets at Securities Commission Malaysia, global Islamic assets under management amounted to US$70.8bil and the number of Islamic funds stood at 1,5353 as at the end-Q1 2017.
"Malaysia accounted for 28.5% of the total Islamic funds, followed by Saudi Arabia and Luxembourg with 15.3% and 13.9% respectively. Comparatively speaking, this has been a significant improvement considering that in 2008, there were only 802 funds with AUM of US$47 billion," he said.
Zainal believes that greater innovation and collaboration has served to grow the Islamic capital market. He cited several innovations, such as Islamic wealth management, social enterprise development via the waqf model and the market's close alignment with sustainable and responsible investment.
"Another factor that can help drive further growth of the global Islamic capital market, and the sukuk market in particular, is the need for large funding for infrastructure
development.
"The suitability of sukuk structures in financing most infrastructure projects combined with their appeal to a wider investor universe provides a strong case for sukuk to be a preferred instrument for such asset-intensive fund raising," he added.
Greater participation among retails invstor can also be fostered through digital platforms, which have been shown to be efficient in attracting younger investors.
"In Malaysia, the SC’s regulatory framework for equity crowdfunding and P2P financing is facilitating small businesses and start-ups to raise the necessary funding through the capital market including the Islamic capital market," said Zainal.
Human capital development is also a crucial factor when considering the growth of the Islamic capital market. According to Zainal, up to one million professionals will be needed by 2020 to meet the needs of Islamic financial institutions.
"This entails allowing for collaborative initiatives in human capital development, with key emphasis on the development of capital market and financial services industry professionals in both Malaysia and the UAE."
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