The Role of Sukuk in Islamic Capital Markets
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2020). The SC estimates that the overall ICM in Malaysia will swell to RM2.9 trillion (or
USD670.4 billion) by 2020 (refer to Boxes 4.1 and 4.2 for details on these 2 Masterplans).
Based on our analysis of historical data, the stimulus for Islamic finance in Malaysia and the
attainment of global recognition have been predicated by the prominence of sukuk issuance by
the private sector, following the GoM’s efforts to consolidate public-sector activities and
promote the private sector as an engine of growth.
Box 4.1: Malaysia’s Capital Market Plan 1 (CMP1)
A 10-year plan (2001-2010) outlining strategic focus and
actions, with 152 recommendations to address 4 key
Malaysian capital-market challenges.
Objectives:
1. To be the preferred fund-raising centre for
Malaysian companies.
2. To promote an effective investment-management
industry and a more conducive environment for
investors.
3. To enhance the competitive position and efficiency
of market institutions.
4. To develop a strong and competitive environment
for intermediation services.
5. To ensure a stronger and more facilitative
regulatory regime.
6. To establish Malaysia as an international ICM.
Source: SC
Box 4.2: Malaysia’s Capital Market Plan 2 (CMP2)
The roadmap to transform the competitive dynamics of
Malaysia’s capital market over the next 10 years (2010-2020).
Outlines growth strategies to address structural challenges and
critical linkages to foster a more diverse and innovative
intermediation environment, and to nurture new growth
opportunities.
A. Growth strategies:
1. To promote capital formation.
2. To expand intermediation efficiency and scope.
3. To deepen liquidity and risk intermediation.
4. To facilitate internalization.
5. To build capacity and strengthen information
infrastructure.
B. Governance strategies:
1. To enhance product regulation to
manage risks.
2. To expand accountabilities as
intermediation scope widens.
3. To develop a robust regulatory
framework for a changing market
landscape.
4. To facilitate effective oversight of
risks.
5. To strengthen corporate
governance.
6. To broaden participation in
governance.
Source: SC
Since the mid-1980s, the private sector has been playing an instrumental role in the strategic
development of the Malaysian economy. Spurred by strong economic expansion and the
concerted support and efforts of the GoM, regulators and market participants, the corporate
bond market has charted an upward growth trajectory. The catalyst for this remarkable
expansion was the Asian financial crisis in 1997, which highlighted the mismatches in funding
maturities and the need for diversification from bank funding. The intermediation by the bond
Phase 1
Phase 2
Phase 3
3 years (2001-2003)
 Strengthen domestic capacity
and develop strategic and
nascent sectors.
2 years (2004-2005)
 Further strengthen key
sectors and gradually
liberalise market access.
5 years (2006-2010)
 Further strengthen market
processes and infrastructure
towards becoming a fully
developed capital market,
and enhance international
positioning in areas of
comparative and competitive
advantage.