Content      
HOME
OUR MISSION
OUR OBJECTIVES
 
Financial Market
Activity
Building a World
Class Talent Pool
Forging Alliances
with the International
Financial Community
C THE FINANCIAL SECTOR: PERFORMANCE AND GROWTH  
  Financial Market Activity 58
 
Active Corporate Debt Market  
58
 
Box 13 – Introduction of Electronic Bond Platform for
 
Trading of Singapore Government Securities  
59
 
Growth in Asset and Wealth Management  
60
 
Trading in the Equities and Futures Market  
60
 
Strong Growth in the Treasury Market  
61
 
Box 14 – Islamic Finance Development in Singapore  
62
 
Box 15 – Regional Commodity Derivatives Trading  
64
 
  FINANCIAL MARKET ACTIVITY

Box 14 Islamic Finance Development in Singapore
 

Islamic finance has a current market size of around US$300 billion internationally and is growing rapidly at about 15% per annum. Strong performance of the Middle East economies, high energy prices and rapid financial innovation has set the stage for Islamic finance to grow and flourish.

Capitalising on this growth, Singapore is encouraging the growth of Islamic finance to widen the array of financial services and strengthen its status as an international financial centre.

 

  Initiatives to Promote Islamic Finance

Regulatory Treatment

 

Given that many of the supervisory processes and prudential measures are common to both conventional and Islamic banking activities, MAS has opted to regulate Islamic banking under the existing framework. However, we recognise that there are differences between Islamic and conventional finance and are prepared to refine the regulations to accommodate and facilitate the development of Islamic finance. For example, in September 2005, the regulations were fine-tuned to allow banks in Singapore to offer financing based on the Murabaha concept. We will continue with this approach in close consultation with the industry. Islamic banks interested in establishing a presence in Singapore will be assessed based on the existing admission framework.

 

  Tax Treatment
 

Given that the nature and structure of Islamic financial products tend to attract more tax than their conventional counterparts, MAS is seeking to align the tax treatment of Islamic contracts with the treatment of similar conventional financing contracts. In line with this policy, the Ministry of Finance announced several changes, in the areas of stamp duties, income tax, and goods and services tax, in the 2005 and 2006 budgets.

 

  Growth and Development of Islamic Products
 

Selected Islamic banking products and services are currently offered in a few conventional banks in Singapore via Islamic “windows”. Prior to 2005, the only Islamic banking product available here was Wadiah deposit accounts. In 2005, a slew of new products were introduced into the market, including Murabaha financing facilities and Shari’ah-compliant term products. Islamic insurance or Takaful, has also been successful in Singapore with over S$500 million Takaful funds under management. There are now about S$2 billion Shari’ah-compliant real estate funds managed out of Singapore.

 

  Islamic Equity Index
 

In recognition of the increasing interest of Middle East investors in diversifying and tapping the growth opportunities in Asia, the first Shari’ah-compliant pan-Asian equity index was launched in Singapore in February 2006. This index serves as a benchmark for Shari’ah-compliant funds investing in Asian equities, and paves the way for the growth of Shari’ah-compliant funds seeking Asian exposures.

 

  Other Developments

IFSB membership

 

The Islamic Financial Services Board (IFSB) was formed in November 2002 to serve as an international standard setting body to ensure the soundness and stability of the Islamic financial services industry. To show our commitment to the Islamic finance industry and to deepen our knowledge in Islamic finance, MAS joined the IFSB in December 2003 as an observer member and became a full member in April 2005. MAS is currently part of the IFSB Supervisory Review Process Working Group and the IFSB Islamic Money Market Taskforce.


Click to Top