Diversification of Islamic Financial Insturments
9
demonstrates, the Total value of the Banking assets, Outstanding Sukuk, Islamic funds’ assets
and Takaful Contributions for year 2015 are USD 1.881 trillion.
Table 5. Breakdown of Islamic Finance Segments by Region (USD billion, June 2016)
Source: IFSB Annual Stability Reports
Compared to the conventional industry, the global Islamic finance industry has witnessed a far
more aggressive growth. According to the March 2016 Islamic Finance Bulletin3 , between 2011
and 2015, the Islamic finance industry grew at a compound annual growth rate of 3.6%,
compared to only 1.5% of the conventional industry. However, the industry is only about 1%
of the size of the global financial industry today.
Sukuk represent the major part of the global Islamic capital markets industry. The issuance of
international Sukuk, as illustrated in the graph below, began in 2001, and witnessed a growth
trajectory in the years 2012 and 2013, though the industry entered a somewhat consolidated
phase in 2015, with some internal and external factors, such as Bank Negara Malaysia’s
decision to stop issuing its short term Sukuk, a sharp drop in oil prices etc.4
The diversity in Sukuk structures has increased in the past two decades, starting from mainly
Ijarah-based Sukuk to now those including Diminishing Musharakah, Musharakah etc.
Corporate and sovereign Sukuk have been issued in many countries, including Malaysia,
Bahrain, Kuwait, Qatar, Jordan, Saudi Arabia, UAE, UK, USA and Pakistan. In countries with a
developed Islamic financial industry, such as Bahrain, Malaysia, Iran, Sudan, Pakistan etc.,
different Sukuk instruments also provide an important avenue for liquidity management
and/or developmental project financing. In other newer jurisdictions, such as Hong Kong, they
can represent an introduction to the Islamic financial industry.
Takaful, or Islamic Insurance, is relatively a slighter newer sector in some jurisdictions, though
the global Takaful industry reached a size of USD 37.7 billion by 20165. Countries such as
Sudan and Malaysia (included in this report) began their regulations for Takaful early: Sudan
pioneered the global industry with the first Islamic insurance company established in 1979. In
Malaysia, Takaful Malaysia commenced in 1981, after the Government of Malaysia had set up a
task force for studying the feasibility of establishing an Islamic insurance company in
Malaysia.6 Countries which most recently included separate Takaful regulations by the end of
3 CEIF, King Fahad University of Petroleum and Minerals
4 IIFM Sukuk Report 2016.
5 Thomson Reuters 2016 Report
6 Takaful Malaysia Annual Report 2016.
Region Islamic Banking
Assets
Sukuk
Outstanding
Islamic Funds’
Assets
Takaful
Contributions
Asia 218.6 174.47 19.8 4.4
GCC 650.8 115.2 23.4 11.7
Mena (exc. GCC) 540.5 16.6 0.2 8.4
Africa (exc. North Africa) 26.6 1.9 1.5 0.6
Others 56.9 2.1 11.2 -
Total 1493.4 318.5 56.1 25.1