Business Takaful

Source: Bernama, 2nd November 2007

Foreign financial institutions are welcome to explore strategic alliance opportunities in Islamic finance, especially in takaful and retakaful operations in Malaysia, Bank Negara Malaysia deputy governor, Datuk Zamani Abdul Ghani said today.

Qualified applicants will be allowed to conduct both Malaysian and international currencies retakaful business, he said.

Flexibility is accorded to the retakaful operators to conduct their retakaful business in Malaysia by way of an incorporated either entity or a branch.

Foreign institutions are allowed to take up 49 percent of the equity interest of domestic takaful operators and Islamic banks, said Zamani.

“Foreign applicants are also welcomed to conduct retakaful business in Malaysia through a joint-venture with Malaysia companies,” he said in his keynote address entitled: “Mainstreaming Islamic Finance: Malaysia As International Islamic Financial Centre”, at the International Takaful Summit held in London today. The text of his speech was released by Bank Negara here today.

The two-day summit, which started Thursday, is being hosted by the Islamic Banking and Finance Institute of Malaysia (IBFIM). It was attended by the Lord Mayor of City of London, Deputy Finance Minister Datuk Seri Dr Awang Adek Hussin and chief executive officer of IBFIM, Datuk Dr Adnan Alias.

Zamani said flexibility would serve as catalyst in Malaysia’s effort to become a centre for takaful and retakaful business through the establishment of a significant number of strong and reputable retakaful operators.

He also highlighted that Malaysia maintains a liberal foreign exchange administration regime where investors are free to obtain ringgit and foreign currencies to fund their investments in Malaysia.

“Malaysia also allows resident and foreign issuers to raise foreign currency-denominated bonds, including Islamic bonds or sukuks,” he said.

Foreigners investing in Malaysia are also free to hedge with onshore banks their committed flow of funds such as the repatriation of investment proceeds, dividends and profit from Malaysia as well as the purchase of ringgit assets in Malaysia, he added.