Islamic Fund Management
162
Type of
Market
PILLARS
Legal,
Regulatory and
Shariah
Framework
Development of
Institutional
Funds
Liberalisation of
Policies and
Guidelines
Tax
Framework
Market
Infrastructure
Developing  Regulators
and market
players work
together to
improve the
level of
awareness
and highlight
governing
rules for
investor
protection.
 Review of
existing
policies and
guidelines and
address the
gaps.
 Establish
specific policies
and guidelines
to regulate
investments
and
administration
of funds.
 Regulators or
institutional
investors
provide seed
investment in
Islamic funds
to spur
performance
and build the
necessary
track record.
 Government or
quasi-
government
sector to allocate
funds as an
incentive. In
return, the
foreign fund
managers must
bring a
minimum level
of foreign
investments
onshore. Rules
on foreign
ownership
should also be
liberalised.
 Same as
above.
 Development of
human capital
through
government
incentives to
increase
knowledge/tale
nt in Islamic
finance.
Infancy  Enforcement
of governing
rules and
regulations to
speed up
market
development,
including the
launch of
guidelines on
Islamic fund
management
and the
setting up of
policies for
investor
protection.
 Identify
institutions as
catalysts in
promoting
investment in
Shariah assets.
 Institute
adoption of
policy
liberalisaton in
the roadmap for
the
establishment of
the Islamic fund
management
industry.
 Amend tax
regime to first
create a level
playing field.
 Tax rebates
are the
quickest
route to
attracting
retail
investments.
 Develop market
platforms and
infrastructure
to enable the
efficient
provision of
products and
services.
 Liberalisation
of capital
controls.
Sources: RAM, ISRA
Knowing which phase of development an Islamic fund management industry is in will facilitate
the implementation of the right strategies. The Development-Stage Matrix has been designed
for this purpose and any jurisdiction may deploy the matrix for the purpose of market
identification. Factors influencing market development should also be monitored, with an
emphasis on improving demand (buy side) and supply (sell side), as these will affect the
sustainability of Shariah assets.
In conclusion, each country should adopt a viable framework and roadmap to progressively
develop its domicile Islamic fund management industry provides a generic guide to
the critical success factors and phases of development vis-à-vis supporting a sustainable