Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
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The growing sophistication of financial intermediation was accompanied by deregulation
and liberalisation which, according to the central bank, lowered friction costs, increased
economies of scale, and expanded distribution channels.
The consolidation of exchanges and clearing houses, followed by the demutualisation and
listing of the exchange, the reduction of transaction costs, the upgrading of market
infrastructure (including new trading platforms) and the consolidation of stockbrokers
were all steps leading to the evolution of the capital market.
Not surprisingly, during the CMP1 the ICM expanded by 13.6% annually from RM293.7bn in
2000 to slightly over RM1trn ($US312bn) in 2010. According to the central bank, at the end
of 2010, more than half of Malaysia’s capital market assets were Shariah-compliant.
Malaysia is also credited with the innovation and the launch of new ICM products and
structures such as the exchangeable sukuk, the sovereign sukuk and Islamic REITs.