Lim Hng Kiang, minister for trade and industry and deputy chairman of the Monetary Authority of Singapore, delivered the speech at the fourth Islamic Banking Conference last week.
In his speech, Kiang referred to figures from the Islamic Financial Services Board which estimated that assets of the global Islamic financial services industry grew by 20.4% year on year to reach an estimated $1.6trn at the end of last year.
The significance of this for Asia, said Kiang, is the growing “connectivity” between Asia and the Middle East, where the majority of the growth in Islamic finance is found.
Kiang said there were three “important observations to be made” on this relationship. First, the economic relationship between the two regions has expanded beyond the energy related sector.
Second, financial flows between the two regions are increasing significantly. Kiang said management consultancy firm McKinsey observed that between 2002 and 2006 11% of the GCC’s capital outflows were to Asia and that it estimates that this share could nearly double to 20% by 2020.
Third, Kiang said there are now increased numbers of financial intermediaries to facilitate financial transactions between the two regions and cites a number of banks which have established themselves either newly into the Middle East or Asia.
From Singapore’s perspective, Kiang said the international finance centre stands to benefit from the increased opportunities this growing cross-border relationship will bring.
