Islamic Fund Management
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Pillar 2 – Development of Institutional Funds
Thrusts Issues and Challenges Key Recommendations
Implement or enhance regulation
of pension schemes.
If not regulated, pension schemes
should be monitored to support
wealth creation. Contributions are
the most innate form of
investment for any fund
management industry.
Establish specific policies and
guidelines to regulate investments
and administration of funds.
Spur institutional participation in
Islamic funds.
Lack of track record of Shariah
funds poses certain challenges.
Regulators or institutional
investors provide seed investment
in Islamic funds to spur
performance and build the
necessary track record.
Pillar 3 – Liberalisation of Policies and Guidelines
Thrusts Issues and Challenges Key Recommendations
Attract foreign fund managers. Domestic wealth may not be
sufficient to spur industry growth.
Market liberalisation offers ease of
foreign fund flows, which can be
deployed to fund domestic
economic activities.
Government or quasi-government
sector to allocate funds as
incentive. In return, the foreign
fund managers must bring a
minimum level of foreign
investments onshore. Rules on
foreign ownership should also be
liberalised.
Pillar 4 – Tax Framework
Thrusts Issues and Challenges Key Recommendations
Implement measures to secure
strong commitments from retail
investors to sustain long-term
growth.
Tax incentives have helped attract
retail investments.
Apart from providing tax rebates
to retail investors, the government
should also consider matching
individual investments in Islamic
funds (e.g. the government will
match every USD1 saved in an
Islamic fund).
Pillar 5 – Market Infrastructure
Thrusts Issues and Challenges Key Recommendations
Strengthen administrative services
to enhance the value chain of fund
management.
Structuring of Islamic funds and
monitoring of Shariah governance
require specific skills, which need
to be organically developed.
Development of human capital
through government incentives to
increase knowledge/talent in
Islamic finance.
Sources: RAM, ISRA