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Global Sharia Asset to Reach US$2 Trillion by 2010

Bisnis Indonesia Daily News – 05-JUN-08

JEDDAH: The Islamic Development Bank predicts global sharia financial asset grows by 20% per annum to US$2 trillion by 2010 from the current US$900 billion, thanks to oil price fluctuation and sub-prime mortgage crisis.

Executive Governor of the IDB for Malaysia Dato Ahmad Husni Mohammad Hanadzlah argued the sub-prime crisis and oil price fluctuation had made investors shift from established financial instruments to safer and more transparent sharia-based ones.

“Investors forecast sharia financial assets will grow by 20% per annum,” said Ahmad, who is also the Malaysian First Deputy Minister of Finance at the 33rd Annual Meeting of the IDB’s Board of Governors in Jeddah yesterday.

Therefore, he continued, the IDB should reposition itself and capture an opportunity to expand sharia financiang and capital market.

More Regulatory Action Needed To Boost Islamic Banking In East Asia

KUALA LUMPUR, June 3 (Bernama) — Islamic banking in East Asia is slowly developing, but needs more action by regulators to establish legal and regulatory frameworks in order to emerge as a significant segment across the region, according to an analyst.

Aside from Malaysia, where the industry’s assets now account for 15.4 percent or about US$62 billion of the country’s banking system assets, its market penetration across the region has been somewhat patchy, said Christine Kuo, vice president and senior analyst of Moody’s Investors Service.

For instance, she said, while Islamic banking has achieved relatively high market penetration in Brunei and asset growth in Indonesia has been rapid (though off a low base), Islamic banking services available in the Philippines, Singapore and Thailand remained very small in terms of asset size.

Gulf Islamic bond sellers shun dollar

Two Gulf borrowers are planning to sell ringgit Islamic bonds in Malaysia, in the latest move that highlights the rising cost of borrowing in US dollars, the previous Islamic bond denomination of choice.

A global credit crunch has made dollar borrowing more expensive, and bets that Gulf states could allow their dollar-pegged currencies to appreciate to dampen inflation has seen dollar assets fall from favour.

National Bank of Abu Dhabi (NBAD) plans to sell up to $925.6 million in ringgit-denominated bonds, which could include an Islamic tranche, the lender said.