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4.2 MALAYSIA
4.2.1 OVERVIEW OF MALAYSIA’S CAPITAL MARKETS
The financial services industry has been a key driver of Malaysia’s economic development. It is
one of the 12 national key economic areas (NKEAs) under the country’s Economic
Transformation Programme (ETP), the national strategic initiative formulated by the GoM to
elevate the country to developed-nation status by is also the foundation of the
Financial Sector Blueprint (FSB), the 10-year masterplan implemented by its central bank
(BNM) for the management of Malaysia’s transition towards becoming a high-value-added,
high-income economy. A key recommendation under the FSB is for Malaysia to consolidate its
success and position itself as a leading international centre and global hub for Islamic finance.
Under its financial services NKEA for Islamic finance, the GoM targets this segment to
constitute 40% of total financing in Malaysia by 2020.
As a result of the GoM’s and regulators’ (i.e. BNM and the SC) concerted efforts, Malaysia has
evolved into one of the world’s most advanced and leading ICMs. Based on our methodology
for this report, we have placed Malaysia under the “matured” category due to its
comprehensive Islamic finance ecosystem, which underscores the country’s position the
world’s largest market for sukuk issuance, with 48.0% (USD15.4 billion) of total global sukuk
issues. Since Malaysia’s first sukuk issue in 1990, this financing tool has spurred its economic
growth, channeling domestic financial resources towards infrastructure development and as a
key component of the GoM’s budget management.
Malaysia’s ICM commanded the lion’s share of 60% of the entire capital market as at end-2016,
compared to 53% a decade earlier, as shown in Chart 4.1.
Chart 4.1: Growth of Malaysia’s ICM over a 10-Year Period
RM1.7 trillion
RM2.9 trillion
53%
60 %
64%
0%
20%
40%
60%
80%
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
8,000.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2020e
RMbillion
Total capital market Total size of ICM % ICM to total capital market
Sources: BNM, SC
Note: Based on the SC’s definition, the size of the ICM is equivalent to the total market capitalization of Shariah-
compliant securities and the amount of outstanding sukuk.
Malaysia’s capital markets have been developed through the recommendations mapped out in
the SC’s Capital Market Masterplan 1 (2001-2010) and Capital Market Masterplan 2 (2010-