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Half of Muslims worldwide will deposit money in Islamic banks by 2015

KUALA LUMPUR: Fifty per cent of Muslims worldwide will deposit their money in Islamic banks by 2015, and an estimated 50% to 60% of total savings of Muslims globally will be managed by Islamic financial institutions in Asia 10 years from now, the 5th International Islamic Finance Conference was told yesterday. Professor Dr Bala Shanmugam, one of three co-authors of “Islamic Banking – A Practical Perspective”, said Islamic banking and finance in Asia had a bright outlook and it was firmly grounded on strong regulations, especially with continued support from national governments in the region. He said there had been exponential growth in syariah-compliant financial service providers from just one in 1975 to more than 300 globally today. He added that global Islamic finance had grown rapidly over the last four years, with assets having quadrupled to almost US$850 billion (RM2.98 trillion), partly due to oil-driven financial liquidity and increasingly savvy Muslim consumers seeking more Islamic financial products. “The International Islamic Financial Services Board has predicted that assets managed under Islamic rules will almost triple to US$2.38 trillion by 2015.

Islamic financial instruments have also grown tremendously with the sale of sukuk growing nine times faster than conventional corporate bonds in 2006. Standard & Poor’s estimates that the sukuk market has reached US$70 billion and will top the US$160 billion mark by the end of the decade,” he said. He said the Islamic finance market was set to be the driver for the circulation of funds, and would create jobs and provide billions in funding for development projects in the future. “In Malaysia, Islamic financial market has entered into its next phase of development and is well-positioned to meet the ever increasing challenges of international competition and financial globalisation,” he said. Bala, who is also chair of accounting and finance at Monash University Malaysia, co-authored the book with Institut Bank-Bank Malaysia CEO Dr Mohd Kamal Khir and Lokesh Gupta. Islamic Banking and Finance Institute Malaysia managing director and CEO Datuk Dr Adnan Alias launched the book at the conference yesterday. Speaking on the sidelines of the conference later, Bala told reporters that while 30% to 40% of Islamic assets worldwide were now managed in Malaysia, it would be difficult to determine how much market share the country would have in 2015. He said major western banks including UBS, HSBC, Barclays, Duetsche Bank, Paribas and Citigroup, recognising the rapid growth in Islamic finance, had created Islamic units or were becoming heavily involved in activities such as the underwriting of sukuk in recent years. - (TDE, 4 Sep 07)

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