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Proceedings of the 12th Meeting of the COMCEC

Financial Cooperation Working Group


return on assets, bank return on equity; (iv) Stability: Bank nonperforming loans to gross

loans, bank capital to total assets, bank regulatory capital to risk-weighted assets.

Mr. ONAT briefly informed the participants about financial developments of the OIC member

countries. In terms of financial depth which is defined as the size of financial institutions and

markets, the OIC member countries have a lower performance than world average. Upper

middle and high income OIC country group supply better financial access.

Afterwards Mr. ONAT presented recent the developments in Islamic finance sector. The Islamic

finance industry assets grew 8.3% and assets value surpassed USD 2 trillion in 2017. He stated

that Islamic finance becomes an inseparable part of international financial system and it has

the potential to help address the challenges of ending poverty and sharing prosperity. Mr.

ONAT mentioned that data used in this chapter collected mainly from International Financial

Services Board’s (IFSB) reports, International Islamic Financial Market (IIFM) reports and

Thomson Reuters Islamic Finance Development Report.

Mr. ONAT stressed that based on the regional development in Islamic finance, the Gulf

Cooperation Council (GCC) continues as the largest region but the share of GCC slightly

decreased in 2017. Asia’s market share has improved with expansions in key markets such as

Malaysia, Indonesia and Pakistan. It was highlighted that Islamic banking is the biggest

segment of Islamic finance industry and its assets value was around USD 1.56 trillion in 2017

representing approximately 76% of the industry’s total assets.

In addition,Mr. Onat expressed that the sukuk market continues to grow and some new

jurisdictions have issued sovereign sukuk in 2017. Global sukuk issuances have increased to

USD 116.7 billion in 2017. He also touched on the developments in Islamic funds which are the

other commonly used capital market instruments. The number of Islamic funds decreased in

2017, but assets under management increased by 19 percent (USD 67 billion). The two key

domiciles for Islamic funds are Saudi Arabia and Malaysia. Mr. ONAT also stated that global

takaful industry continued its upward trend in many countries and has been gaining

popularity in recent years. The global takaful contributions reached to USD 26 billion in 2016.

Question(s) and Comment(s):


Sukuk market remained attractive to issuers and investors in various regions and

financial hubs. What are the main factors that make Malaysia global leader in sukuk market?


Mr. ONAT stated that Malaysia continues to dominate sukuk market but also

Indonesia, the UAE and Turkey are other important sukuk issuers. Malaysia’s comprehensive

capital market regulations, policies and best-practice guidelines with regard to sukuk market

make sukuk an attractive instrument for both issuers and investors.

Comment: Malaysia’s Islamic finance infrastructure, Shariah legal framework and a dynamic

Islamic capital market support this development.