SINGAPORE--The Republic’s position in the global Islamic finance sector recently got a boost when industry leaders gathered here to develop strategies to grow the market internationally. But while hosting last month’s World Islamic Banking Conference plugged Singapore deeper into a part of the global financial system that is seen to have massive growth potential, Shariah-compliant offerings have yet to gain much traction in the domestic retail banking market. That is partially because traditional banking is so well-established here, according to Mr Alhami Abdan, head of international finance & capital market at OCBC Al-Amin Bank, which offers personal and business Islamic banking services but operates mainly in Malaysia. “Singapore is already a very well-banked and financially-serviced market. Then there is the small percentage of Muslims in the country along with low awareness of Islamic finance value propositions. These add up to the prevailing low natural demand,” Mr Alhami told TODAY. “There is little natural incentive for both supply and demand in order to gather the necessary momentum to reach a critical mass such as in thriving Islamic markets,” he added. But Maybank Islamic, which is currently the biggest player in the sector in Singapore, believes there is significant untapped demand for Islamic consumer banking. Since launching its Singapore operations in 2005, it has managed to attract over S$1 billion in deposits. While that may be an eye-catching amount, it constitutes around 0.3 per cent of total household deposits, which amount to around S$305 billion according to data from the Department of Statistics for the first quarter this year. Still, despite such a low take-up in absolute terms, Maybank Islamic’s chief executive Muzaffar Hisham is encouraged by the progress that has been made: “We will continue our efforts in establishing ourselves as a universal bank of choice offering competitive products for all.” As part of its attempts to stimulate the market, Maybank has been offering new products: in April, it launched two new Shariah-compliant banking products for buyers in Singapore to finance residential as well as commercial and industrial properties in Malaysia. That brought to 9 the number of Shariah-compliant products available from Maybank Singapore. For the market to truly take-off, there may need to be greater regulatory support, according to Mr Alhami: “For Islamic finance to progress on a stronger footing, a complete eco system has to be put in place encompassing all core components of the broader financial services market, and regulatory and operational infrastructures among others,” he added. But that support may not be forthcoming, as the Government has made it clear that domestic retail Islamic banking is not a priority in this small market. Speaking in 2005, Mr Ong Chong Tee, deputy managing director of MAS, said the larger opportunity for the financial industry in Singapore is to leverage off the infrastructure that is in place to develop wealth management and capital market activities. As a result, while growth opportunities are there, they are likely to remain limited. “As commercially driven entities, most banks would be wary of the added cost implications from the ever increasing regulatory burdens when investing capital into a nascent market that currently offers low prospects and has limited governmental support,” Mr Alhami said. Source: TODAY
Posted on: Mon, 08 Jul 2013 06:48:23 +0000
Trending Topics
Recently Viewed Topics
© 2015