KL, Jakarta Should Collaborate In Islamic Finance And Halal Market

KL, Jakarta Should Collaborate In Islamic Finance And Halal Market


By Mohd Nasir Yusoff

JAKARTA, June 18 (Bernama) -- Malaysia and Indonesia should strengthen their collaboration in advancing the agenda to further develop Islamic finance and the halal market for the benefit of the international community, Malaysian Minister in the Prime Minister's Department Datuk Seri Effendi Norwawi said Monday.

Addressing some 700 captains of industry at the Malaysia-Indonesia Investment and Finance Summit here, he said that would provide both countries with the strategic avenues for partnership where they have distinct advantage.

"This will create a niche for both nations to secure a competitive advantage not only in the regional markets but also globally," he said, adding that Malaysia and Indonesia must not be perceived as separate, individual markets but rather as gateways to a larger global economic and financial environment.

He said the vast business and commercial potential of the halal sector is beyond doubt, with a captive market of 1.6 billion Muslims and an estimated market size of more than US$600 billion (US$1 = RM3.44).

The opportunities in that regard are tremendous, not merely in the context of the global Muslim community but also the non-Muslim world as halal products and services are readily accepted everywhere, as long as they meet global standards and quality, product and service integrity, and conform to safety standards and care for the environment.

Effendi explained that the Malaysian government has outlined holistic strategies to intensify the development of the halal industry towards achieving the vision of making Malaysia a global halal hub. These include setting up the Halal Industry Development Corporation last year to spearhead and coordinate the development of the halal sector.

"Both local and international investors are welcome to take advantage of the various programmes being offered in Malaysia," he said, adding that among the projects are the creation of dedicated halal industrial zones to tap the growth of the global halal market.

As for Islamic finance, he said it opens tremendous opportunities in enhancing the economic and financial linkages between Malaysia and Indonesia, as well as other regional economies, to promote growth and development in the region.

Financial institutions and companies from Malaysia and Indonesia can establish strategic alliances to raise funds and channel them for development via issuance of sukuk (Islamic bonds) or the setting up of private equity funds based on Syariah principles, he added.

He pointed out that in the global Islamic bond market, the issuance of Islamic instruments is on the increase and has already surpassed the US$50 billion mark with more governments, including from among the G8 (Group of eight industries countries), and multinational corporations exploring the possibility of issuing sukuk for their fund raising exercises.



Effendi said Malaysia aims to be a global centre for the origination, distribution and trading of Islamic financial instruments, Islamic fund and wealth management as well as a centre for takaful and re-takaful, and has already accorded a number of incentives to accelerate the growth.

On Malaysia-Indonesia trade, he said both countries have not adequately taken advantage of the opportunities that each side has to offer, especially as statistics showed that in terms of Malaysia's exports to the major Asean countries, Indonesia accounts for only 12 percent of the total.

The percentage of Malaysia's exports to Indonesia in relation to its total exports to world markets is even smaller, at only 3.1 percent, with exports to the developed economies taking up the major portion, he added.

He hoped the investment and finance summit, organised by the Labuan Offshore Financial Services Authority (LOFSA) will blaze the trail in exploring new growth areas and investment opportunities in various forms, including joint ventures with equity considerations, strategic alliances or technological collaborations.

Effendi, together with Indonesian Minister for Economic Coordination Dr Boediono and accompanied by LOFSA chairperson Tan Sri Zeti Akhtar Aziz, who is also Bank Negara Malaysia governor, later witnessed the signing of two memoranda of understanding.

One was between Malaysian government-owned trustee company Amanah Raya Bhd and PT Gapura Prima to establish a real estate investment trust (REIT) through a joint venture company.

The other was between the AmanahRaya-Gapura Prima consortium and PT PP, one of the largest state-owned general contractors in Indonesia, on the inclusion of the East Point Shopping Mall Surabaya in the REIT.



-- BERNAMA