The international Islamic finance sector has grown fast over the past ten years, registering annualized growth rates of over 15%. Although it still composes a small proportion of the international financial industry, its capacity for further growth in Asia is enormous.
The Monetary Authority of Singapore (MAS) purposes to develop Islamic finance in Singapore by leveraging on its present power in banking, business finance, wealth management, insurance and capital markets. As a global finance centre in Asia, Singapore-based financial foundations ought to be able to provide a complete suite of financial products and services, covering that of Islamic finance.
MAS has adopted a level-playing area advance towards Islamic finance, and has suited this increasing sector within its existing single regulatory and supervisory framework. MAS works intimately with the industry to survey its regulatory system to assure that the needed financial substructure and trade conditions are in place to nurture the further development of Islamic banking and finance in Singapore. Working with the Ministry of Finance and the Inland Revenue Authority of Singapore, MAS seeks to assure that Shariah-compliant products are not disfavored in terms of taxes when compared to conventional products.
The year of 2009 experienced the start off the landmark MAS Sukuk facility to help supply regulatory and liquidity requirements for Singapore-based financial institutions. In May, MAS issued its guidelines on the application of its banking regulations to Islamic finance and new regulations admitting banks to conduct Murabaha interbank placements, Ijara, Diminishing Musharaka financing and spot Murabaha. The 6th IFSB Summit was held in Singapore where more than 300 delegates were attended from Asia and the Middle East.
Islamic Financial Institutions in Singapore
More financial institutions have introduced a broader range of Shariah-compliant products here for years. These cover banks such as Standard Chartered Bank, HSBC, OCBC, CIMB and Maybank. Singapore experienced the initiate of its first fully-equipped Islamic bank called the Islamic Bank of Asia, which is a joint venture between DBS Bank and Middle Eastern private investors in 2007. Other Islamic financial foundations such as Arcapita, Al Salam Bank-Bahrain and AEP Investment Management (AEP) have set up offices in Singapore. HSBC Insurance has managed takaful funds for the domestic market, while Tokio Marine Retakaful has been founded in Singapore since 2004 to serve the district.
Singapore: Facilitating the Development of Islamic Finance
Singapore searches to play a catalytic role in developing Islamic finance in the area in a variety of ways:
First, MAS continues high standards in the industry and keeps working with fellow governors and the private sector to fine tune its governing approach and develop the needed frameworks and substructure. As a member of the IFSB, and other global fora, MAS continues to take part in standard setting and empower the harmonization of industry practices and global standards where suitable.
Second, Singapore maintains to support ability development and provide co-funding for financial practising at founded training providers and qualifying education institutions.
The last, Singapore works towards raising the consciousness of Islamic finance and support platforms for practicians to increase their knowledge and understanding of Asia and the Middle East. Islamic finance will play a vital role of increasing importance in heightening connectivity between the Middle East and Asia, two of the more vivacious districts in the world, which are awaited to lead in providing new trade chances. Singapore is well-placed to catalyze deeper economic and investment flows between these regions and stays strongly attached to the development of Islamic finance, situated in the heart of Asia.
