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Asia next growth centre for Islamic financing, says Sultan Nazrin

DUBAI: Asia, in particular East Asia, Southeast Asia and South Asia, is expected to be the next growth centre for Islamic financing, asset creation and asset management services.

Sultan of Perak Sultan Nazrin Muizzuddin Shah said these areas could send Islamic investment services soaring to the next level based on Asia’s unparalleled rates of wealth creation.

Speaking at the Islamic Forum Dubai 2014 organised by Franklin Templeton Investments here, Sultan Nazrin Shah said by the end of this year, the number of high net-worth individuals in these regions was expected by some analysts to surpass those in North America and Europe.

His speech text, themed “Building Greater Inter-Connectivity Through Islamic Investing”, was released here yesterday. Sultan Nazrin Shah, who is the patron for Malaysia’s Islamic Finance Initiative, said the expansion of Asia’s middle-class population, including Malaysia, would be a vital driver and contributor to middle-class consumption which was expected to increase to 3.2 billion people in 2030 from 525 million in 2009.

He said closer to home, Asean was a rapidly growing region with a population of 600 million — half the population of China but twice that of the United States’ population — and with a total gross domestic product of US$2.3 trillion (RM7.36 trillion).

With the region in the process of integrating to form the Asean Economic Community, Sultan Nazrin Shah said infrastructure development was an area that would need massive financing, adding that Asean’s financing requirements for at least the next two decades were considerable.

“With the concepts of risk and reward sharing firmly built into Islamic project financing, it would seem exceptionally suited to the region.

“Malaysia is gearing up to support Islamic financing and investing requirements of the region. By working in collaboration with other Islamic financial centres, particularly those with project finance experience, we can ensure that the growth in Islamic assets continues to rise at rapid rates.”

The ruler, however, said that Islamic financing and investment, though more mature now, would need to fix weaknesses.

such as compliance with the Islamic Financial Services Board’s risk management standard.

Sultan Nazrin Shah cautioned leaders of Islamic financial institutions not to be complacent but to take more proactive action in ensuring that they comply with best industry practices.

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