Malaysia must look at developing other areas of Islamic finance beyond just Islamic bonds, or sukuk, experts say
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"Malaysia has all the right ingredients to trailblaze in Islamic finance, but it must go beyond sukuk. We need to develop other new products as well," said Ali Abbas Zaidi, Maybank Investment Bank's head of Islamic markets.
Ali was a panellist in a discussion yesterday on the future of Asia's Islamic investment industry at the IFN Issuers and Investors forum in Kuala Lumpur.
Malaysia is an international Islamic hub and widely known for having the world's largest sukuk market. It also houses some 145 syariah investment funds.
Securities Commission managing director Datuk Nik Ramlah Nik Mahmood, who chaired the session, agreed with Ali on the need for product innovation in other areas.
"From our perspective, sukuk is very important. But there's also a whole host of petro-market products that can be (introduced)," she said.
Ali said that new products could be developed in all areas, such as private equity, infrastructure, liquidity, asset and project financing.
"It could underpin any type of economic activity," he remarked.
Ali said there was much that could be learned and leveraged on from the conventional finance industry.
What makes a difference is the way the products are used, he pointed out.
Mohamad Nedal Alchaar, secretary-general of standard setter Accounting and Auditing Organisation for Islamic Financial Institutions, highlighted that there was no such thing as "toxic products" in the industry, only "toxic practices".
To a question by Nik Ramlah on whether Islamic finance should take advantage of the recent failures in conventional finance to become more prominent, Nedal said he did not think it was appropriate to do so.
"I recognise the opportunities that we have today after the global financial crisis, but ... I don't think it's appropriate for us to ride on ailing bodies.
"I think we have our own merits. Islamic finance has a lot to offer and should rise independently from this crisis.
"We should detach ourselves from the crisis and sell what we have on ethics, governance," he said.
An estimated 1,200 delegates attended the three-day IFN forum, an annual event said to be the world's largest gathering of industry experts and practitioners.
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