The outlook for Islamic finance is “very positive” on the back of strong domestic demand and demand from the government to fund major projects, said a banker.

The banker who requested anonymity said Islamic Finance, which currently constitutes about 20 per cent of the total finance industry, had tremendous room for growth in tandem with the market demand.

“There are no obstacles to Islamic Finance growth in Malaysia because of the infrastructure in place and strong support and commitment of the government and the central bank,” he told Bernama on the sidelines of the sixth Islamic Financial Intelligence Summit 2013 (Ifis 2013).

He, who is also a participant at the summit, said the Islamic Finance industry in this country, which started in 1983 with just one bank, has grown tremendously for the last 30 years and created a robust and dynamic economic sector with the support of Bank Negara Malaysia and the government.

However, he said Islamic bankers needed to keep up the momentum and remained focus on elevating the industry to a higher level with all the infrastructure already in place.

The banker said Malaysia was very fortunate to have major banking segments being developed within the Islamic Finance space as compared to other markets which do not have the proper infrastructure.

He said though Islamic Finance in Malaysia was synonymous with sukuk, other segments such as retail financing and corporate banking were also just as established and strong as the debt equity instrument.

“Sukuk tends to take the spotlight because of the volume of transactions and the usage of the transactions to fund major projects like infrastructure projects,” he said.

Apart from that, he said there were others segments which are gaining strength such as takaful and Ar-rahnu.

*This article was published on 11 November 2013 by Bernama. Read the original article here.