National and Global Islamic Financial Architecture:
Prolems and Possible Solutions for the OIC Member Countries
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Consumer Protection Architecture
Given Luxembourg’s minimal Muslim population there have, unsurprisingly, been no
developments specific to Islamic finance.
There is currently no Islamic bank in Luxembourg, and this issue has therefore not arisen.
Human Capital and Knowledge Development Framework
As described above, there is currently some training provided by professional institutions.
5.2.4. Strategic Approach and Achievements: Singapore
Singapore has been attempting to position itself as a major Islamic finance jurisdiction since
2005, building on its strong and diversified position as an Asian financial centre, but it has also
sought to provide Islamic financial services to its significant Muslim minority.
An early, and particularly helpful, statement of Singapore’s strategic approach was given in a
speech by the Deputy Managing Director of the Monetary Authority of Singapore (MAS), Mr
Ong in remarks to a conference in March 2005 in which he stated that Singapore cannot be a
complete international financial centre without offer Islamic financial services (Ong 2005). He
went on, however, to say that this was not the same as expecting Singapore to be an Islamic
banking hub. With a small domestic market, the larger opportunity would be to leverage off
Singapore’s existing infrastructure and to offer wholesale market activities in the areas of
wealth management and capital markets. To this end, an active strategy was initiated by MAS
for the market's future development and some specific initiatives were set out including a
higher level of participation in the work of the IFSB whose annual Summit was hosted in 2009.
As regards banking, no fundamental change to the banking regulations was envisaged other
than fine-tuning the rules to accommodate and facilitate the development of Islamic finance
(Ong 2005) This has indeed been the policy that has been followed subsequently by MAS, with
no materially different regime from that applied to conventional banks but with some helpful
published interpretations (MAS 2010) and minor amendments where necessary (for example
to facilitate banks in Singapore offering financing based on the Murabahah concept by
exempting the relevant purchasing and selling of physical goods from the restrictions on banks
conducting non-financial activities, and, later, through an amendment to make it possible for
banks to fund projects using Istisna’a) (MAS 2009-2010). Singapore’s interpretations include
treating profit-sharing investment accounts as risk-bearing investments rather than deposits.
As regards tax, the overall policy approach was to align the tax treatment of Islamic contracts
with the treatment of their conventional counterparts (Ong 2005) . In line with this policy, the
Finance Ministry announced several changes in the 2005 and 2006 budgets. In 2005, Singapore
waived the imposition of double stamp duties in Islamic transactions involving real estate and
accorded the same concessionary tax treatment on income from Islamic bonds as that
applicable to conventional bonds. In 2006, income tax and goods and services tax applications
on some Islamic products, most importantly sukuk, were further clarified, again with the aim
of aligning the tax treatment with that of conventional bonds.
In 2001, Maybank, Malaysia’s largest bank, began marketing an Islamic collective investment
scheme in Singapore. In 2005, it moved into Islamic banking proper by introducing a Shariah-
complaint online savings account and Shariah-compliant savings cum checking account.
(Duriat 2015) In 2006, the first Shariah-compliant term deposit in Singapore was launched by
OCBC Bank. The most important development in the banking sector was, however, the launch
in 2007 of the Islamic Bank of Asia, a joint venture between Singapore’s largest bank, DBS, and