SINGAPORE: Singapore will allow banks to offer investment products through so-called Murabahah, expanding the city-state's Islamic financial offerings, said Heng Swee Keat, managing director of the Monetary Authority of Singapore.
Murabahah is a form of financing or investment where the costs and profit margins are agreed to by all parties before the transaction. The central bank would also review regulatory and tax issues to boost Islamic banking, Heng told reporters yesterday at the International Islamic Finance Forum in Singapore.
“It's part of my effort to enhance the asset management industry in Singapore by providing a wide range of instruments that can be made available,'' Heng said. “We did this in response to feedback from the industry that they would like to see the changes so that they can offer the products.''
Demand for Islamic investments is growing as oil money floods into the Persian Gulf and Singapore is vying with neighbours Malaysia and Indonesia for business from investors and depositors in the Middle East.
The global Islamic finance industry's assets under management may have topped US$1 trillion, according to a January report by the Malaysia-based International Islamic Financial Services Board.
The city-state has drawn the interest of banks such as Malaysia's CIMB Bhd. Badlisyah Abdul Ghani, head of CIMB Islamic, said he planned to offer Islamic deposits and financing products, as well as commodity Murabahah in Singapore “soon''. – Bloomberg