Stalled Islamic Finances in Singapore despite being a highly rated economy

Singapore is a well-established financial hub in Asia and also known as reputable names all over the globe. It has all the essentials for what a need but has not built up and worked on its regulatory environment.

It has been 14 years since then senior minister Goh Chok Tong announced the government’s intention to make the island state a hub for Islamic finance. Following the announcement, there has been a revamp of the regulatory framework, tax equalization laws and membership of global Islamic finance bodies, but industry figures still talk about Singapore in terms of potential rather than progress. Adnan Chilwan, group chief executive officer of Dubai Islamic Bank (DIB), speaking at the IFN Forum Singapore, at a panel moderated by Euromoney in the last week of August stated: “Singapore has not capitalized as it should have done given the strength of its financial system.” Singapore has many Islamic landmarks in the capital market, but they are over a decade-year-old, which shows that the country is not utilizing its full potential in the sector. “Other sovereigns around the world have established their presence in that market, even those with a relatively limited size or local demand, like Hong Kong,” says Marie Diron, managing director in the sovereign risk group at Moody’s Investors Service. Singapore used to have a full-fledged Islamic bank but now it doesn’t.

Bello Lawal Danbatta, secretary-general of the Islamic Financial Services Board (IFSB), sees a lot of potential in Singapore becoming a major name in Islamic financing due to it’s highly rated economy but also due to the strategic geographical location where it is surrounded by predominantly Islamic nation such as Malaysia and Indonesia.