Islamic Finance to grow significantly in 10-15 years

Islamic Finance to grow significantly in 10-15 years: Singapore Deputy Prime Minister

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Islamic Finance is set to offer significant opportunities for growth and diversification in the next 10 to 15 years, says Singapore Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam.

According to Bernama News, Shanmugaratnam, who is Minister for Finance, said he is optimistic about its prospects firstly because Islamic financial institutions have in the main escaped significant damage in the global financial crisis.

“They are well-placed to grow, at a time when many of the global banks, especially the European banks, are deleveraging or focusing on consolidating their balance sheets.

“Secondly, Islamic finance has much potential to diversify into new growth areas such as trade and infrastructure financing in Asia and the emerging markets,” he said in a special address at the 8th World Islamic Economic Forum in Johor Baharu.

His speech was made available here. The WIEF, being held from today until Thursday at the Persada Johor Convention Centre here, was graced by Prime Minister Datuk Seri Najib Tun Razak, who is also the Minister of Finance.

Shanmugaratnam said these new areas will allow Islamic banks to reduce their exposure to the real estate sector, and to take advantage of the stronger growth potential of the emerging market economies.

He said there are gaps to be filled in structured trade finance and in funding for infrastructural projects as the emerging markets grow, and as global finance consolidates.

Thirdly, he said, Islamic finance can also seek to meet the increased demand for simpler and more transparent products and ‘back-to-basics’ finance. Investors are now much more circumspect about complex products and their risks.

Shanmugaratnam said that the (financial) crisis taught investors worldwide not only about the damage they can face from the risks that are known and unsurprising, but also from risks ‘that we do not know’.

He said Islamic finance, with its focus on transparency, price certainty and risk-sharing, can ride this wave of demand for simpler and more basic investments.

Zulkifli Hasan
With Professor Faris Kaya at his office, Istanbul, Turkey


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