Islamic
Capital Market (ICM)
Malaysia is the first Islamic country that has its Exchange
(Bursa Malaysia) demutualised and listed on the market. Bursa Malaysia was listed on 18 March 2005
and represents a single consolidated group which comprises equities (Main Board, Second Board and
MESDAQ Market), derivatives and offshore markets.
Bursa Malaysia and the capital market in Malaysia have several
market attractiveness, such as:
Liberalisation of foreign participants.
Liberalisation of foreign exchange control where non-residents are free to invest in
Malaysia in any form. Non-residents may obtain financing from licensed onshore banks (licensed
commercial and Islamic banks in Malaysia) both in ringgit and foreign currency. They are also able
to enter into foreign exchange contracts with licensed onshore banks to actively manage their
exchange risk exposures arising from their ringgit investments. Non-residents are free to exchange
their foreign currency into ringgit and vice versa of any amount as well as repatriate their
capital, profits and income earned from Malaysia in foreign currency;
Apart from this, based on a slue of strong initiatives undertaken
by the government as announced in the Malaysian Budget 2008 in September 2007 to promote Islamic
fund management industry, which included:-
EPF able to channel RM7 bil to be managed by
Islamic fund management companies.
Full tax exemption until 2016 for fund management
companies on all fees received from Islamic fund management activities.
Islamic fund management companies allowed to be
wholly owned by foreigners
Islamic fund management companies allowed to
invest all assets abroad.
To attract greater middle eastern investments, tax
incentives will be provided for existing stockbroking companies to set up Islamic stockbroking
subsidiaries
3 new foreign stockbroking licences to be issued
to leading stockbroking companies that can source, intermediate business and order flows from
Middle East.
In 2007, foreign trades made up 36.6% of total trading in 2007, an
increase of 34.3% recorded in 2006. Retail participation rose from 34% to 37%. Overall, market
velocity improved sharply from 33% in 2006 to 53% in 2007.
Since 1998 up to 30 May 2008, the number of listed companies grew
by 239% from 291 to 986. Market valuation touched RM 971.28 billion (USD 299.78 billion) as at 30
May 2008 whereby 843 listed companies or 85.5% of the stocks are shariah compliant securities.
Bursa Malaysia adopts the best corporate governance practices, e.g.
mandatory quarterly reporting, mandatory director training, one-third of the board comprising
independent directors. In this respect, Bursa Malaysia was the first Malaysian company and the only
exchange to be recognised by Investor Relations (IR) Global Rankings 2008 as one of the five best
companies in Asia/Pacific and Africa in the area of corporate governance practices.
(Note: Statistics as at 30 May 2008).
