Business Takaful

Source: Business Times, 20th October 2007

The government may not issue anymore new takaful licences to foreign players in the near term, but will encourage them to form joint ventures with local institutions, a deputy minister said.

“I don’t think so …we are willing to give out takaful licences like what we did to full-fledged Islamic banks, but the takaful experience from outside Malaysia is very limited,” Deputy Minister of Finance Datuk Dr Awang Adek told reporters yesterday.

He was earlier speaking at a conference on Islamic finance organised by the Inter Pacific Bar Association in Kuala Lumpur.

Malaysia has already approved three foreign Islamic banks to operate in the country and four new takaful licences were issued to consortiums and joint ventures between domestic and foreign financial institutions, he said.

Although the penetration rate of takaful, or Islamic insurance in Malaysia is still low, at around six per cent, the country now accounts for 90 per cent of the takaful business in the world, Awang Adek said.

He added that Malaysian banks and Islamic finance players are highly sought after globally to provide advisory services.

“For example, the former Soviet Union countries, … some have approached us for investment and advice. That’s the potential.

“There’s a huge interest in Islamic finance from these countries,” he said.