Value Propositions
Wan Abdul Rahim Kamil
Consultant, Islamic Capital Market
Securities Commission Malaysia
REGULATORY FRAMEWORK
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SC has undertaken progressive measures to build up regulatory and supervisory framework for
Islamic finance to protect investors’ interest
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Malaysia’s comprehensive regulatory infrastructure also ensures there is end-to-end Shariah
compliance on a consistent basis - provides assurance to investors
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Introduction of Shariah-specific rules and guidelines (Islamic Securities, REITs) and best practices
(Islamic stockbroking) provide clarity and certainty
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Market has responded positively to these efforts by quickly bringing new products to the market
(Islamic REITs; innovative sukuk structures using Musharakah, Mudharabah and Ijarah)
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Budget 2008 incorporated specific measures to further bolster the attractiveness and value
proposition of the country:
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Foreign ownership on fund management companies and REITs management companies to be allowed
up to 70 percent, while Islamic fund management companies will be allowed to be fully foreign owned
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These companies will be granted income tax exemption on all fees received in respect of Islamic fund
management companies
FACILITATIVE TAX FRAMEWORK
 An essential tool in facilitating innovation and product promotion
 Malaysian government and regulators work closely with industry to ensure
conducive tax environment for the ICM and to strengthen Malaysia’s
position as international Islamic financial centre
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Budget 2009 tax incentives:
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Tax exemption for 3 years for fees and profits earned by institutions undertaking activities relating to
arranging, underwriting, distribution and trading on non-ringgit sukuk issued from Malaysia
 Other tax incentives designed to attract more investment into Malaysia
include the abolishment of withholding tax on investments in Ringgit and
foreign currency bonds and Sukuk, among others
CAPACITY BUILDING
 Recognising the dearth of highly trained personnel in the Islamic finance
industry not just in Malaysia but also worldwide, Malaysia embarked upon a
structured capacity building effort covering all sectors i.e. banking, takaful and
capital market.
 The SC, apart from being a regulator is also entasked with the development of
the market. The ICM Department of the SC has conducted numerous research
on applications of existing Islamic contracts as capital market tools, as well as
have devised several mechanisms that would contribute to efficient market
transactions.
 The highest authority of approval for such tools or mechanisms is the Shariah
Advisory Council of the SC.
 Several developments include structures for alternative investments such as
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Replicated securities borrowing and lending (SBL)
End to end compliant ETF
Commodity Murabahah Platform
INTERNATIONALISATION OF ICM
 In preparing itself for meeting challenges of globalisation, Malaysia took a stand to
strengthen its domestic position by way of issuances of guidelines, policies and bestpractise approaches that add clarity to the requirement of the market. Investor
protection in line with the IOSCO parameters has been our main objective in ensuring
market confidence and this is evident in the stipulations of the CMSA 2007. Today our
guidelines are benchmarked to by many issuers, investors and intermediaries.
 Now working hard to expand the international dimension of our Islamic capital market,
which has been widely recognised as Malaysia’s key value proposition
 Efforts have resulted in several leading financial institutions establishing their global and
regional Islamic fund management operations in Malaysia
 Mutual Recognition Agreement

An initiative to increase the connectivity of Malaysia’s ICM to global Islamic capital market
network
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First between two Islamic markets, for cross-border distribution and marketing of Islamic funds
rahim@seccom.com.my
wark06@gmail.com