The Monetary Authority of Singapore (MAS) is working on measures to further boost Islamic finance activities in the country.
Deputy Chairman of the MAS, Lim Hng Kiang said that includes a review of the regulatory and tax treatment to speed up the issuance of Islamic financial instruments.
The growth potential for Islamic finance in Singapore has yet to be fully realised and at the opening of the Annual World Islamic Banking Conference on Tuesday (4th June 2013), Mr Lim, who is also Trade and Industry Minister, said Singapore will tap on its strengths to support the growth of the sector.
Mr Lim said: “Singapore can play a role in giving growth of cross-border Islamic financing an even greater push. Towards this end, the MAS is presently working with other government agencies as well as with the industry to identify and address time-to market issues to further facilitate Islamic finance activities in Singapore.
“This includes looking into providing greater clarity and certainty in the regulatory and tax treatment to expedite the issuance of Sukuk and other Islamic capital market instruments.”
Industry estimates show that the assets of the global Islamic financial services industry grew by some 20 per cent on-year to US$1.6 trillion as at the end of last year and industry players said prospects ahead are bright.
A big opportunity lies in the rising connectivity between the Middle East and Asia, as well as robust growth in both regions.
Industry players said Islamic finance has the potential to offer funding for infrastructure development and lending through Islamic micro-finance.
Toby O’Connor, chief executive officer of The Islamic Bank of Asia, said “The issue is how do we get the absolute amount of assets up in the Islamic finance. When you look at growth in the global economy, a lot of the growth comes from Islamic countries that have strong inter-connectivity with one another.
“We have seen a lot of growth in Turkey, we have seen a lot of growth from Saudi as well as Malaysia and Indonesia. There is a huge bright spot for the continued growth of the industry.”
Industry players said the lack of critical mass in Islamic banking as compared with conventional banking and the absence of a supportive legal framework for Islamic finance transactions could hamper growth in the sector.