Diversification of Islamic Financial Instruments
152
Malaysia aspires to transform into a developed and more competitive economy by 2020. This
transformation will rely largely on the private sector to drive greater productivity and
innovation to move up to higher value-added activities that will underpin and sustain strong
economic growth.106
Malaysia’s market with its current structure serves the regional market and the international
market. The financial sector contribution to nominal GDP is expected to increase to 10-12% in
2020. 107 In Malaysia, Islamic finance market through long term vision continues to expand and
grow across the different market segments: Islamic banking, Islamic Capital Market, Takaful
industry, and other emerging industry such as wealth management and financial planning,
through strong support from the regulator by providing conducive environment that enables
the market players to operate in a very productive manner, producing world class instrument
and products, innovative and tailored to the customer need cross the different market
segment, within the global best practices in regulation and operations. According to the
Central Bank of Malaysia, Malaysia has also placed a strong emphasis on human capital
development alongside the development of the Islamic financial industry to ensure the
availability of Islamic finance talent. All of these value propositions have transformed Malaysia
into one of the most developed Islamic banking markets in the world. 108 As for the future
direction the market will embark on fintech solutions and digital platform activities through a
careful monitoring and supervisions from the regulators
3.8.2 INTRODUCTION
The Malaysian market is regarded as a well-diversified market in terms of products offered,
which includes Islamic banking, Takaful and Islamic Capital Market. It also includes Islamic
wealth management and Shariah financial planning. This market diversification creates a wide
range of products and instruments that serve the needs of the different stakeholders and
shareholders in the market.
Malaysia has a very comprehensive and diverse market that enables the Islamic financial
institutions to operate in very efficient and effective manner.
The different shareholder and stakeholder of the Islamic financial system in Malaysia play a
significant role to the development on the Islamic financial industry. As for the regulatory
framework it is represented by the Ministry of Finance, the Central Bank (Bank Negara
Malaysia), Securities Commission Malaysia, MIDC, Court and KLRCA. As for the Industrial &
Market segment, it is represented by the Islamic Banking, Takaful and Islamic Capital market,
which includes private equity, venture capital, asset management, financial advisory and
financial planning. As for Markets it is represented by Stock market, Money Market and Bursa
Malaysia Suq Al-Sila (BSAS). As for Shariah governance, it is represented by the main corporate
governance organs, which include but are not limited to Shariah Boards/ Committee, Shariah
Review and Shariah Audit. As for the Legal framework, it is represented by Islamic Financial
Services Act (IFSA 2013) and Capital Market and Services Act 2007 (CMSA 2007). In addition
106 Central Bank of Malaysia, Financial Sector Blueprint 2011–2020, P24.
107 Ibid, P53.
10 Retrieved 26/05/2017
108 Monthly Statistical bulletin, March 2017, BNM, P8.
10 Retrieved 26/05/2017