A top official in the Monetary Authority of Singapore has stressed that the promotion of the island’s Islamic finance industry remains key, even though two tax incentives aimed at promoting it were allowed to lapse recently.
"Like all our tax incentives, they [had] a fixed tenure, in this case, of five years,” Ng Nam Sin, assistant managing director of the MAS, told an audience at an Islamic finance event in Singapore on Tuesday morning.
“It is useful to note that Islamic Finance activities will continue to be incentivised, alongside conventional finance activities, under our other existing schemes,” he added.
“The lapsing of the two incentives is thus no reflection of MAS’ continuing commitment to develop Islamic financial services in Singapore.”
Ng went on to stress that Singapore’s “proposition” for the Islamic finance industry had to be about more than “just tax advantage”.
Instead, he went on, the city-state’s success as a financial centre came from “its high standards of regulation; deep and liquid capital market, the presence of international buy side players, and a critical mass of financial intermediaries with expertise to address a wide range of financing needs”.
The global Islamic finance industry is now worth around US$1.3trn, while the sukuk issuance reached a record level in 2012, Ng noted, with demand for such financial products coming not only from the Muslim community but also from non-Muslim investors.
That said, Singapore is located near two major Islamic finance countries: Malaysia, which has established itself as Asia-Pacific's dominant Islamic finance centre, and Indonesia, which has the largest Muslim population of any country, at more than 200 million. Wealthy individuals from both these countries are among those who invest in Singapore's financial services industry.
Singapore has been involved in promoting the sector's growth since 2004, Ng said.
To read Ng's comments in full on the MAS website, click here.