Islamic banking and finance is likely to continue growing in the Asia-Pacific region but the real test of its sustainability will be how the system reacts to a major financial crisis, a report said yesterday.
The industry is set to develop its own identity separate from conventional banking as new Islamic financial products are rolled out, said the report by Financial Insights, a company under market research and analysis firm International Data Corp.
"The future for Islamic banking and finance in Asia looks bright and continued support by government authorities should ensure this future is grounded in strong, sensible regulation," said Abhishek Kumar, an analyst at Financial Insights.
He noted, however, that the industry's growth in recent years has occurred during a period of economic expansion, and there are concerns over how it would perform during a major financial crisis.
financial crisis
"How the system handles a major financial crisis or recession will be the true test of its sustainability," Kumar said.
Conventional banking systems in several Asian countries crumbled during a financial crisis in 1997, exposing the industry's weaknesses and excesses. They have since recovered.
Islamic financial assets under management are currently valued at more than US$400 billion worldwide, with the industry growing at double digits annually, the report said.
Islamic banking fuses principles of Shariah and modern banking. Islamic funds are banned from investing in companies associated with tobacco, alcohol or gambling considered taboo by Muslims.
As the industry matures, there is likely to be a shift from Islamic banking products that resemble conventional ones to completely new offers, helping it to develop its own unique identity, the report said.
complementary
"The ... industry has reached a point where, in some product areas, it can provide a credible alternative to traditional banking products," it said, adding that this will be complementary rather than competitive.
The report added that Islamic funds are attracting a large number of non-Muslim clients.
Malaysia has "effectively established itself as the regional, if not global, hub for Islamic finance," the report said.
Indonesia, Pakistan, Thailand and Singapore are also among the countries in Asia actively promoting Islamic finance, it said.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
SHOT IN THE ARM: The new system can be integrated with Avenger and Stinger missiles to bolster regional air defense capabilities, a defense ministry report said Domestically developed Land Sword II (陸射劍二) missiles were successfully launched and hit target drones during a live-fire exercise at the Jiupeng Military Base in Pingtung County yesterday. The missiles, developed by the Chungshan Institute of Science and Technology (CSIST), were originally scheduled to launch on Tuesday last week, after the Tomb Sweeping Day holiday long weekend, but were postponed to yesterday due to weather conditions. Local residents and military enthusiasts gathered outside the base to watch the missile tests, with the first one launching at 9:10am. The Land Sword II system, which is derived from the Sky Sword II (天劍二) series, was turned