Proceedings of the 12th Meeting of the COMCEC
Financial Cooperation Working Group
4
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):
Question: 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?
Answer: 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.