Islamic Fund Management
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5.2 General Recommendations for Improving Islamic Fund Management
A broad set of recommendations has been proposed to address the inherent challenges faced
by each country. Depending on its stage of development, the recommendations are envisaged
to accelerate or jump-start the country’s developmental efforts.
Matured Market
Based on our analysis of Malaysia, its level of maturity is depicted by its well-developed
architecture as defined through its robust legal, regulatory and Shariah frameworks, and
strong ICM ecosystem that promotes the sustainability of Shariah assets. These factors
facilitate the development of a stable Islamic fund management industry. Nonetheless, there is
still room for further improvement, as defined by the SC’s Islamic Fund and Wealth
Management Blueprint. In accordance with the five core pillars, the recommendations i
are proposed for consideration.
Table 5.2: General Recommendations for a Matured Market
Pillar 1 – Legal, Regulatory, Shariah Frameworks and Market Supervision
Thrusts Issues and Challenges Key Recommendations
Provide enabling frameworks to
support fintech and attract
international SRI investors.
The choice of which international
SRI standard to adopt will have a
bearing on market activities.
Adoption of an open architecture
will facilitate business activities.
Proactive engagement with
market players on which route to
adopt will help in the decision-
making process.
Pillar 2 – Development of Institutional Funds
Thrusts Issues and Challenges Key Recommendations
Development of institutional
investors with a focus on investing
in Islamic funds.
Some institutions are concerned
about the performance of Islamic
funds.
Realign values with beneficiaries
and manage the perception of
market performance .
Streamline religious beliefs with
investment behaviour.
Muslims are unaware of their
responsibilities in money
management.
The same values adopted by a
Muslim in his or her way of life
should restrict investors to only
choosing Islamic funds.
Pillar 3 – Liberalisation of Policies and Guidelines
Thrusts Issues and Challenges Key Recommendations
Enhance market access and
international connectivity.
Based on industry feedback, there
are still gaps in the system which
could lead to a slower turnaround
in the launch of funds and
insufficient market involvement.
Regulators to proactively engage
with domestic and foreign fund
managers to seek practical
solutions to closing the gaps.
Enhance market position as an
international fund centre.
Bilateral and multilateral
regulatory cooperation
arrangements with international
jurisdictions exist, although more
can be done to further expand
market linkages and connectivity.
Cooperate with other jurisdictions
to promote Malaysia as a
passporting centre for global
Islamic funds.