By A. Stephanie
Though CIMB Group has been one of the Asean Economic Community (AEC)’s strongest proponents in recent years, its Islamic banking arm is still seeing majority of business from Malaysia operations.
As of end December 2014, CIMB Islamic assets in Malaysia stood at US$40 billion (RM146 billion), 80% of its Asean assets of US$50 billion (RM183 billion). The remainder was largely accounted for by its two other core markets in the region, which are Singapore and Indonesia.
AEC integration expected to kick in Dec 31 this year, but CIMB Islamic executive director and CEO Badlisyah Abdul Ghani said clear regulations on Islamic financing will be needed from Singaporean and Indonesian authorities before the industry takes off in both jurisdictions.
Speaking at the sidelines of the World Halal Conference, he said, “I think we are seeing greater flows from the two markets, but our focus is to be credible and significant within the local markets themselves because we feel that the penetration rate for Islamic finance in both Singapore and Indonesia is still very very small.
Badlisyah Abdul Ghani
“In Indonesia, Islamic finance is not particularly new. But Malaysia took 40 years to be where we are today as an industry, and Indonesia is experiencing this is a shorter period. They are now coming to the stage where Malaysia was in 2004, when we saw an exponential growth in this industry.”
The CEO added that Indonesia is approaching this stage, but it will only happen once they put in place regulations such as the tax neutrality framework and clear guidelines on Islamic private debt securities Malaysia introduced in 2004.
“We need a little bit more in Indonesia and Singapore to see them have that exponential growth we experienced. Indonesia is making move towards that, and have given a much stronger indication in the last year in terms of what exactly they want to put in place moving forward – as is Singapore,” he remarked.
CIMB Group has a presence across the region, but as far as its Islamic business is concerned, the bank’s thrust in all the other Asean markets outside of these three countries is wholesale advisory.
“We would finance Asean-centric investments and activities by our clients, from an Islamic syndication perspective but other than that, we do not have an in-depth local presence that allows us to garner local currency deposits from an Islamic banking perspective,” Badlisyah said.
“Our current focus is to ensure we grow our Indonesian and Singaporean businesses. We have no plans to go beyond our current core market in terms of mergers and acquisitions (M&As) and other activities.
However, he noted that the bank sees the whole world as an opportunistic market – hence its involvement in UK’s debut sovereign sukuk of GBP200 million (RM1.08 billion) and Turkey’s US$1 billion (RM3.66 billion) sovereign sukuk last year.
You must be logged in to post a comment.