KUALA LUMPUR: Worldwide Islamic assets, currently estimated to be worth over US$1 trillion (RM3.4 trillion), are projected to grow 15% to 20% annually, Deputy Finance Minister Datuk Dr Awang Adek Hussin said.
“The potential for sukuk financing is tremendous. Over the next five years, Asia is expected to spend US$1 trillion, while the requirements in the Middle East are estimated to be US$500 billion over the same period,” he said at the LexisNexis-Inter Pacific Bar Association seminar on Islamic finance here yesterday.
He said Islamic finance was practised in over 75 countries, with syariah-compliant assets of Islamic banks and Islamic window-based conventional banks exceeding US$500 billion, adding that the market capitalisation of the Dow Jones Islamic Index was now over US$10 trillion while the aggregate issuance of Islamic sovereign and private debt sukuk had surpassed the US$50 billion mark.
In Malaysia, Awang Adek said Islamic banking assets amounted to RM143 billion, or 12.1% of total banking assets, as at end-June 2007 while Islamic deposits and financing totalled RM107.5 billion and RM81.5 billion respectively, or 12.8% and 13.3% of total banking deposits and financing.
The country was also the largest issuer of Islamic bonds in the global capital market, accounting for about two-thirds of sukuk issuance, he added.
“Takaful assets totalled RM7.6 billion or 6.2% of total assets of the insurance industry as at mid-June 2007,” he said.
Also for the same period, Awang Adek said outstanding Islamic private debt securities represented 51% of the domestic corporate bond market.
Meanwhile, he said there were 106 Islamic trust funds with net asset value (NAV) amounting to RM10.9 billion, or 7.6% of NAV of the unit trust industry, as at mid-May 2007.
He also said competition in the Islamic financial sector was intensifying and other countries were pursuing the creation of Islamic capital markets such as Hong Kong which was looking to develop an Islamic bond market and Japan, where the Japan Bank for International Cooperation planned to issue ringgit denominated sukuk in the near future.