Islamic finance has ample room for growth
HUGE POTENTIAL: Rising Muslim population, SMEs to spur sector further, says Turkish DPM
ISLAMIC finance may have grown rapidly over recent years but there is still ample room for it to expand further as more small-to mid-sized firms take to it and Muslim population grows, Turkey's Deputy Prime Minister (DPM) Ali Babacan said.
Babacan, in a public lecture at the Global Islamic Finance Forum (GIFF) here yesterday, said despite Islamic finance assets having passed the US$1 trillion (RM3.1 trillion) mark globally, they still make up only about one per cent of total financial assets.
"This means there's still ample room for growth and there's huge potential. SMEs (small- and medium-sized enterprises) and a rising Muslim population will help propel Islamic finance to a new level," Babacan said.
His comments come as Turkey completed its very first sukuk to strong investor demand.
The US$1.5 billion (RM4.6 billion) Turkish treasury sukuk attracted demand of almost five times its issue size, Babacan said, adding that this will likely help spur further issuances in the country.
"We feel this is going to set a benchmark for other government institutions and the private sector. We've prepared the tax and legal framework (and so) believe there's good room for growth in this," said Babacan, who also oversees Turkey's economic and financial affairs.
Turkish Islamic banks, known as "participation banks", have seen their assets grown faster than that of their conventional counterparts in recent years.
There are four participation banks in the republic, three of which are largely owned by Middle Eastern banking groups.