The Impact of Islamic Finance Development in Malaysia Towards the Asset Management and Wealth Management (Amwm) Industry

THE IMPACT OF ISLAMIC FINANCE DEVELOPMENT IN MALAYSIA TOWARDS THE ASSET MANAGEMENT AND WEALTH MANAGEMENT (AMWM) INDUSTRY

by: ZAHIDI AHMAD, IFP

1.0 INTRODUCTION Islamic finance becoming increasingly integrated to the international financial system after experiencing a rapid changes in the international Islamic financial lanndscape. The emergence of Islamic finance has continued to grow strongly and currently the global asset size for Islamic finance is estimated to be between US$800 billion and US$1 trillion, and growing at 15% per annum. The number of Islamic financial institutions (IFI) worldwide now has exceeded over three hundred in seventy-five countries and offering a wide range of Syariah compliant products (El-Qorchi, 2005). The enhanced depth of the Islamic financial markets has also increased the attractiveness of the IFI as an asset class for investment. Islamic asset management may become the fastest growing, most dynamic and most promising segment with tens of trillions of dollars in assets under management worldwide among government pension funds, mutual funds, takaful operators, waqf scheme, bank and corporate treasuries, private banking and sovereign wealth funds. These sophisticated financial instruments and products are allowing funds to access capital and source investors with growing appetite for Islamic alternative assets. Islamic finance in the UAE, reports said, has been recording a steady and impressive growth in last few years with $73 billion (AED269 billion). Industry experts estimate the global industry size to rise to $2 trillion (AED7.3 trillion) in five years. Malaysia, notwithstanding the efforts of the Gulf countries, claims the world’s largest Islamic capital market with assets rose 15 percent to $123 billion (AED452.6 billion) in 2011. The country has integrated the Islamic sector into its broader financial system, providing institutions as well as intermediaries a deep market in shariah-compliant equities, sukuk,...