Posted inSoutheast Asia

Shariah fund industry in Malaysia

Even as growing numbers of multi-national asset managers are moving to set up shop in Malaysia, as they prepare to tap into the demand for Islamic fund management, an informal poll of market participants suggests that the industry's growth is being stymied by a lack of product innovation and range.

The poll, of delegates attending an event in Kuala Lumpur in March, found almost 64% believed the Shariah-compliant fund industry has not grown more rapidly because of the inadequate product innovation and range that the market is offering.

Why hasn’t the Shariah fund industry grown more rapidly?

Lack of Human Capital 13.6%
Lack of product innovation and range 63.6%
Lack of demand 22.7%
When questioned on Labaun’s importance for the success of the government’s plan, nearly half of the respondents said it has become less attractive for asset managers.

Labaun’s importance for government’s financial sector master plan

Yes, it is still very important as an offshpre hub 25.0%
No, it has become less attractive to asset managers 50.0%
Other schemes are more important for example MM2H, ETP 25.0%

(MM2H, ETP stands for Malaysia My Second Home Programme and the Economic Transformation Programme)

The Fund Selector Asia Forum delegates were polled on a range of other industry-specific other issues, including business practices, industry outlook and regulations. 

Macro-economic outlook

Bullish 41.7%
Neutral 54.2%
Negative  4.1%

Own business outlook

Positive 72.2%
Neutral 22.2%
Negative  5.6%

Favoured asset class for your own investment in the next one year

Equities 61.1%
Bonds 0.0%
Multi-asset 33.3%
Commodities 0.0%
Property 5.6%
Cash 0.0%

Innovations from their fund partners

More innovations 22.7%
Fewer innovations 40.9%
No change 36.4%

Should Malaysia sign the APEC Funds passport?

Yes, this will widen the market much more 72.2%
No, it has already signed up for the ASEAN CIS framework 22.2%
It will make no difference – both schemes are doomed to fail 5.6%


Part of the Mark Allen Group.