Opening Remarks by MOS Teo Ser Luck at the Islamic Financial Services Conference 2014 at Orchard Hotel

Excellencies

Distinguished guests and speakers

Ladies and gentlemen

Good morning, and to our foreign guests a warm welcome to Singapore.

I am pleased to join you today.  This is the second year that practitioners of Islamic financial services from the region have come together under the auspices of the Joint Singapore-Malaysia Business Council to pursue opportunities for collaboration.

Growing the Industry

The importance of today’s gathering cannot be over-emphasised.  The Islamic finance industry has continued to expand robustly around the globe.  Last year, Islamic assets grew an estimated 20 per cent to reach US$1.8 trillion

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. Nonetheless, the industry remains a relatively small proportion of the world’s overall financial services industry. The critical enabler to propel the industry to maximise its full potential is by facilitating greater cross-border Islamic transactions.  Industry practitioners in Malaysia and Singapore can contribute significantly to this effort in two ways:

a.     First, by leveraging our strong bilateral trade, investment and financial ties to further increase the Islamic financial transactions between our two countries; and,

b.    Second, by fostering greater awareness and use of Islamic finance by more corporates in Singapore and the region.

It is encouraging to note that collaboration in Islamic finance between Singapore and Malaysia has already begun.  In Singapore, the Malaysian banks are partnering Singapore corporates and financial players to structure S$ denominated corporate sukuk programmes and Islamic bank credit facilities. On the other end, Singapore-listed companies are venturing out to tap the Ringgit sukuk market in Malaysia. Malaysian and Singapore banks are already exploring tie-ups with the Middle East banks in Singapore to distribute Islamic products to the Middle East; and to encourage corporates from that region to do their Islamic fund-raising here.  We encourage more of such cooperation to facilitate cross border activities and flows.

Addressing Challenges

Today, the level of awareness and utilisation of Islamic financing among Singapore companies remains relatively low. Industry practitioners and promoters can play an important role to help firms understand how the various Islamic financial instruments can expand and complement their financing options. Industry practitioners can also help increase the awareness of local firms that Islamic financing can be utilised by a wide range of industries such as energy, manufacturing and utilities; and for various purposes such as trade and project financing.

I am happy to note that following feedback from its members, the Singapore Malay Chamber of Commerce and Industry or SMCCI has been talking to financial institutions about possible tie-ups and collaboration in using Islamic finance.  I urge other Chambers and the Singapore Business Federation to do likewise.  As Singapore enterprises become keener to tap on Islamic finance, industry players will be encouraged to provide attractive products to meet this demand. The Government will continue to enhance the operating environment for companies and Islamic finance. I urge our companies to find out more about Islamic finance from SMCCI today.

I hope the interaction and sharing at today’s conference will give participants greater insights and share some best practices on how we can make Islamic finance a robust and viable option for our companies.  On this note, I wish everyone a fruitful discussion. Thank you.

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  Islamic Financial Services Industry Stability Report 2014, IFSB.