In terms of focused implementation, rapid developments in Singapore indicate that Singapore’s Islamic finance industry is fast on the heels of that of Malaysia, which has been nurturing its own Islamic finance industry since much earlier, circa the 1980s.
Malaysia-based corporate law firm Azmi & Associates’ roadshow in Singapore early this year is emblematic of the growing interest of foreign law firms to gravitate towards Singapore, attracted by the potential of Islamic finance in the island nation.
According to Ahmad Lutfi Abdull Mutalip, the Partner who leads Azmi & Associates’ Global Financial Services and Islamic Banking Practice Group, Singapore’s latest moves to develop its Islamic finance sector is not surprising, given that it has – especially so circa 2005 and 2006 – tailored its fiscal and monetary policies to facilitate Islamic finance.
“We have been following the progress of Islamic finance in Singapore with keen interest, hence our roadshow,” Ahmad Lutfi says, “and our recently opened branch in Johor Bahru is one of the elements in the Azmi & Associates strategy for expanding our range of Islamic financial solutions for the businesses and institutions in Singapore.” Johor Bahru is the thriving capital city of the southern Malaysian state of Johor, which borders Singapore.
Singapore has, like Malaysia, removed double-stamping duty on Islamic banking instruments. Singapore has also licensed its first Islamic bank, the Islamic Bank of Asia. More recently, there were Singapore’s first Shariah-compliant Exchange-traded Fund and its first local-currency sovereign sukuk, issued by the Monetary Authority of Singapore (MAS) on a reverse-enquiry basis: the maturity, price and size of the sukuk is determined by investors demand instead of by the issuer. “This is reflective of the consistent emphasis by MAS on organic growth of the Singaporean Islamic finance industry, as it prefers to encourage the private sector to take the leading role,” Ahmad Lutfi says.
While Singapore may derive much advantage from Malaysia’s longer experience with Islamic finance, Malaysia may similarly learn from Singapore’s advances in regulating an open Islamic finance industry. Such cross-pollination between law firms that are based in Singapore and Malaysia and that offer Islamic financial services may show that the way forward for the sustainable growth of Islamic finance in the Southeast Asia region is through cross-border co-operation.