Syariah Fund vs Conventional Fund

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Takaful is an Islamic insurance

Takaful is an Islamic insurance concept which is grounded in Islamic muamalat (banking transactions), observing the rules and regulations of Islamic law. This concept has been practised in various forms for over 1400 years. It originates from Arabic word Kafalah, which means "guaranteeing each other" or "joint guarantee". In principle, the Takaful system is based on mutual co-operation, responsibility, assurance, protection and assistance between groups of participants. It is a form of mutual insurance.

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Islamic References to Takaful

These fundamentals are based on the sayings of Prophet Mohammed (S.A.W.). Based on the hadith and Quranic verses mentioned below, Islamic scholars had decided that there should be a concerted effort to implement the Takaful concept as the best way to resolve these needs. Some of the examples are:

    * Basis of Co-operation Help one another in al-Birr and in al-Taqwa (virtue, righteousness and piety): but do not help one another in sin and transgression. (Surah Al-Maidah, Verse 2)[1]

    * Allah will always help His servant for as long as he helps others. (Narrated by Imam Ahmad bin Hanbal and Imam Abu Daud)

    * Basis of Responsibility The place of relationships and feelings of people with faith, between each other, is just like the body; when one of its parts is afflicted with pain, then the rest of the body will be affected. (Narrated by Imam al-Bukhari and Imam Muslim)

    * One true Muslim (Mu’min) and another true Muslim (Mu’min) is just like a building whereby every part in it strengthens the other part. (Narrated by Imam al-Bukhari and Imam Muslim)

    * Basis of Mutual Protection By my life, which is in Allah’s power, nobody will enter Paradise if he does not protect his neighbour who is in distress. (Narrated by Imam Ahmad bin Hanbal)

“The basic fundamentals underlying the Takaful concept are very similar to co-operative and mutual principles, to the extent that the co-operative and mutual model is one that is accepted under Islamic Law."

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Principles of Takaful

The principles of Takaful are as follows:

    * Policyholders co-operate among themselves for their common good.

    * Every policyholder pays his subscription to help those that need assistance.

    * Losses are divided and liabilities spread according to the community pooling system.

    * Uncertainty is eliminated in respect of subscription and compensation.

    * It does not derive advantage at the cost of others.

Theoretically, Takaful is perceived as cooperative insurance, where members contribute a certain sum of money to a common pool. The purpose of this system is not profits but to uphold the principle of "bear ye one anothers burden." Commercial insurance is strictly not allowed for Muslim as agreed upon by most contemporary scholars because it contains the following elements: i) Al-Gharar (Uncertainty) ii) Al-Maisir (Gambling) iii) Riba (Interest)

There are three (3) models and several variations on how takaful can be implemented.

   1. Mudharabah Model

   2. Wakalah Model

   3. Combination of both

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CWA GBOP 29 Feb 2012

Dear Honoured Guest, 

We would be honoured by your presence at our Grand Business Opportunity Presentation :

@Eastin Hotel PJ 

@29 Feb 

@7.30pm - 10pm. 

Guest speaker: Mr Robert Young


Organiser: 

CIMB Wealth Advisors Berhad 

Pls RSVP by 27/2 by calling 016.926.4004 or sms name & contact number to 016.9227.658 

Invited by: AM Firuszana, Charisma Agency, Damansara Intan, PJ.

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CIMB-Principal Wins Best Overall Fund Group Award @ Feb 20, 2012

Kuala Lumpur: CIMB-Principal Asset Management Berhad (“CIMB-Principal”) today won the Best Overall Fund Group Award at the prestigious industry wide event, The Edge-Lipper Malaysia Fund Award 2012, thanks to the consistent out-performance of its funds. This win cements CIMB-Principal’s position as the premier fund provider. 

“We are proud to be accorded this award that recognise, as well as validate our consistent funds’ performance. We, at CIMB-Principal are focused on harnessing top-billing performance to provide utmost value to our investors, supported by good portfolio risk management practices and continuous diligent risk oversight by our Investment Committee,” said Campbell Tupling, Chief Executive Officer, CIMB-Principal at the awards ceremony.

Elaborating on the company’s strategic plans for Malaysia and its regional franchise, Tupling said, “In line with our vision to be ASEAN’s most valued investment manager offering total asset management solutions, we will continue to develop products and expertise as a regional house, strengthening our retail and institutional business growth not just in our four core markets, but across ASEAN.” CIMB-Principal currently has presence in Malaysia, Indonesia, Singapore and Thailand, with strong on-ground presence to meet individual markets’ rising demand and maturity.

In addition to the Best Overall Fund Group Award, CIMB-Principal also swept additional awards at the ceremony. The awards are as below:

Fund	Category
CIMB-Principal Equity Fund	Equity Malaysia, 3 years
CIMB-Principal Equity Fund	Equity Malaysia, 10 years
CIMB Islamic Equity Fund	Equity Asia Pacific Ex-Japan, 3 years
CIMB Islamic Equity Fund	Equity Asia Pacific Ex-Japan (Islamic), 3 years
CIMB Islamic Balanced Growth Fund	Mixed Asset MYR Balance – Malaysia (Islamic), 3 years
CIMB Islamic Balanced Fund	Mixed Asset MYR Balance – Malaysia (Islamic), 10 years

As of 31 December 2011, CIMB-Principal’s total assets under management (AUM) stood at RM28.3 billion. It has a total of 54 unit trust funds (21 are Shariah-compliant), 6 wholesale funds and 2 Exchange-Traded Funds (ETFs). CIMB-Principal is also one of the largest institutional money managers in Malaysia. 

Source: http://www.cimb-principal.com.my/News-@-CIMB-Principal_Wins_Best_Overall_Fund_Group_Award.aspx

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Bekerja Sendiri

Selepas bekerja lebih kurang 10 tahun, akhirnya Alisa rasa sudah sampai masanya dia menceburi bidang pekerjaan yang lain. Dengan pengalaman dan kenalan yang telah dia peroleh sepanjang tahun-tahun kebelakangan ini, dia ingin menceburi bidang kewartawanan, sebagai wartawan bebas. Mari kita lihat pada beberapa pengaturan kewangan yang perlu disediakan sebelum kita mengambil keputusan untuk bekerja secara persendirian.

Sewaktu menjamu hidangan teh pada suatu petang, Alisa menanya ayahnya sama ada ayahnya pernah terfikir bekerja secara persendirian semasa kerjayanya. Adam terkejut dengan pertanyaan itu tetapi menjawab dia pernah memikirkannya, malah lebih daripada sekali. Tetapi atas sebab dia memperoleh pendapatan yang baik dan agak selesa dengan kerjanya, dia mengetepikan hasrat tersebut. Sebenarnya, Adam berasa takut untuk bekerja bersendirian kerana dia baru sahaja mendirikan rumah tangga dan mempunyai banyak komitmen seperti pinjaman rumah dan kereta yang perlu dijelaskan. Lagipun, dia menjelaskan bahawa ibunya sedang mengandung Alisa pada ketika itu dan dia fikir agak berisiko berbuat demikian pada masa itu. Jadi, dia mengambil sikap berhati-hati dan telah terus bekerja sehinggalah dia bersara.
Alisa tidak sabar menanya ayahnya sama ada dia terasa kesal dengan keputusannya, lalu ayahnya menjawab tidak. Dia amat menyukai kerjanya kerana dia dibayar untuk melakukan apa yang digemari. – yakni mengurus kewangan! Walau bagaimanapun, dia memberitahu Alisa bahawa jika dia bercadang untuk berbuat demikian, dia perlu tahu mengenai 4 “P” untuk menjadi seorang usahawan, sesuatu yang dia dengar daripada rakan baiknya, seorang usahawan.

Keghairahan

Adam menasihati anaknya bahawa jalan ke arah kejayaan lebih mudah jika dia ghairah dalam apa yang dilakukannya. Pendek kata, setiap pagi anda beria-ria pergi ke kerja dan betul-betul menikmati apa yang anda lakukan dan anda seolah-olah lebih bertenaga semasa menghadapi cabaran. Dia dapati bahawa kebanyakan usahawan yang berjaya sangat ghairah dalam apa yang mereka lakukan. Malah apa yang mereka lakukan membayangkan diri mereka yang sebenarnya!
Mengikut petikan Richard Carlson: “Perkara-perkara yang lazimnya dianggap mustahak adalah penting, tetapi soalnya di sini adalah tahap kepentingannya. Kejayaan, kesempurnaan, pencapaian, wang, pengiktirafan – anda dapat memiliki kesemuanya tetapi ia bukanlah segala-galanya. Malah,, tanpa adanya rasa ghairah dan perasaan menghargai kehidupan, ia tidaklah mendatangkan makna yang seberapa.”

Pengorbanan

Setakat manakah anda sanggup Berkorban untuk menjadi usahawan yang berjaya? Adam dapati ramai orang muda cuma ingin menjadi bos mereka sendiri tetapi tidak sanggup bekerja keras dan membuat pengorbanan. Sebenarnya, anda mungkin perlu bekerja lebih keras lagi dalam tahun-tahun yang awal dan tanggapan bahawa anda akan mempunyai lebih banyak masa buat diri anda atau keluarga anda adalah salah. Pengorbanan perlu dibuat untuk segala-galanya dan untuk menjadi usahawan yang berjaya, juga memerlukan banyak pengorbanan.

Rancang

Dalam apa jua yang anda lakukan, anda harus ‘Rancang kerja anda, dan laksanakan rancangan anda’ Malah ini lebih penting lagi apabila melibatkan Rancangan dan Strategi Perniagaan yang disusun dengan baik. Anda harus ketahui bagaimana anda akan menghasilkan wang dan dapat meramalkan perbelanjaan perniagaan dan keperluan modal anda. Anda juga perlu menyelesaikan segala kemusykilan apabila anda dijangka untuk mendapat semula harga pulangan modal dan mempunyai pelan kontingensi, kalau-kalau berlakunya perkara yang di luar dugaan. Kita biasanya dengar tentang klise, “ Orang tidak Merancang untuk gagal, mereka cuma gagal untuk Merancang!”

Jumlah Pokok atau Modal

Akhir sekali, sumber-sumber kewangan anda adalah penting. Sebahagian besar perniagaan memerlukan komitmen modal yang besar dan anda mesti memastikan bahawa anda mempunyai dana tambahan yang secukupnya. Pertama sekali, pastikan anda mempunyai sumber-sumber kewangan yang mencukupi untuk memenuhi perbelanjaan tetap anda selama 6-12 bulan. Kemudian, anda perlu menganggarkan perbelanjaan modal awalan yang diperlukan untuk membuka kedai anda dan untuk menjalankan perniagaan. Seterusnya, aliran tunai perniagaan anda, sekurang-kurangnya harus mampu menanggung semua kos menjalankan perniagaan seperti sewa, gaji, utiliti dan yang paling penting, boleh membayar para si piutang tepat pada masanya.
Ada beberapa cara untuk memperoleh dana – minta sedekah, buat pinjaman atau menggunakan tabungan anda! Sudah pasti bergantung pada diri sendiri mungkinlah pilihan terbaik tetapi bukan semua orang yang berkemampuan. Biasanya orang meminjam daripada keluarga dan rakan mereka atau institusi kewangan. Selidiklah terlebih dahulu untuk memperoleh terma-terma kewangan yang terbaik dan ada sebilangan insentif atau pinjaman mudah yang ditawarkan oleh pihak kerajaan bagi jenis-jenis perniagaan tertentu. Memang ada manfaatnya sekiranya anda ada kawan yang bekerja sebagai akauntan ataupun pegawai bank! 

Kata-kata Hikmah

Alisa berfikir tentang 4 “P” yang ditekankan oleh ayahnya dan sudah pasti dia mempunyai Keghairahan dan sanggup Berkorban untuk mencapai sasarannya. Walau bagaimanapun, dia masih perlu berfikir tentang Rancangan perniagaannya dan menghitung semua perkara yang berhubung kait dengan kewangan bersama ayahnya. Dan bagi “P” yang keempat, ada kemungkinan besar dia akan memohon pinjaman daripada ayahnya, kalau bukan ayahnya dari siapa lagi! Dalam apa jua keadaan, usahanya memerlukan sedikit modal dan dia beranggapan jika dia mampu mengekalkan kos overhed yang rendah, dia dapat mengusahakannya. Inilah MASANYA!
Bagaimana dengan anda? Adakah terlintas di fikiran anda untuk menjadi bos sendiri sejak kebelakangan ini? Ini tentunya saranan yang menarik tetapi seperti kebanyakan perkara di dalam hidup kita, ada pengorbanan yang perlu dilakukan. Fikirlah tentang 4 “P” yang disebutkan di atas sebelum anda mengemukakan surat peletakan jawatan anda dan apabila anda telah membuat keputusan, teruskan dengan SEMANGAT MEMBARA untuk mencapai kejayaan, BOS!

Nasihat Ayah:

1. Penuh Bersemangat Dalam Segala Yang Anda Dilakukan
2. Sanggup Berkorban untuk Kecapi Kejayaan
3. Rancang Kerja Anda dan Perinci Rancangan Anda.
4. Pastikan anda mempunyai Sumber Kewangan yang cukup untuk menyara kehidupan anda pada tahun-tahun permulaan.

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When Should I Leave My Job To Start A Work At Home Business Opportunity

For more information on GBOP, please sms name & email 016-9227-658.

“Are you on drugs?”

That was the response I received most often when I left a six figure annual income salary at 24 to start my own business. Most people were shocked by the fact after I had spent so many hours with this company, dropped out of school, and moved out of state to a place where I knew no one. It would seem easy to say I was committed to this new job and that it would create an income for me for years to come.

Well the truth is when you have the entrepreneur itch, it doesn’t matter how well you are getting paid. This is the big question that you will have to decide when to leave your job: How do I want to live my life?

A work at home business opportunity can be exciting, but hard to figure out when you don’t have the experience. To help you sift through the madness of sleepless nights, the groggy mornings at a cubicle with TS reports, and angry management yelling at you for being late to a meeting about the weekly meetings; let us discuss what you should weigh before making this Robert Frost-ish decision before reaching the tipping point.

What do you owe the company you work for?

Often you will have contractual obligations to your current employer that require you to stay with a company for a certain period of time. You might also have a non-compete clause in your contract that you will make it hard to start up your business if they are very similar businesses.

Often non-competes can be pretty shaky because many states make it hard to enforce it when you have a right to work with your trade. You have a responsibility to feed your family and the government won’t hold you back from that. Companies tend to be more concerned that you are stealing their trade secrets. That might require you to sign a non-disclosure agreement.

Even more than contractual, you might feel that you have a moral responsibility toward your company because of what they have done for you. They have provided a living for you, possibly an education, a chance to feed your family, and put a roof over your head.

One of the smartest things you can do is figure out if you can trust your employer and be honest with them about your feelings to move forward with your life. This is what my business partner did with his job and it made it easier for him to move on. Businesses are created by employees improving on business ideas of their former employers.

What responsibilities do you have toward your family?

This very well could be the most important aspect you will have to face when deciding to leave your job. I once heard a man say, “No success in the world can compensate for failure in the home.”

Your family is your legacy and what you will leave behind when you pass from this world. Never forget that work is just a means to spend more time with them and take care of them.

Decide what will help you spend more quality time with your family. If you are stressed all the time with your job, but still get to spend time with your family; is that what you want? Do you want your time spent with them to be less significant because you are cranky?

Would it be even more stressful for you to leave your job and work from home while you are trying to start your business? Can you leverage your business enough so you can still spend time with your family? What will help you to provide for your family’s future, such as retirement for you and your spouse, or college funds for your children?

There are a lot of questions to be asked, but you have to decide what weighs as the most significant aspect of your relationships. Look at what you are doing right now and ask yourself, “Is this day-to-day routine getting me what I want?”

How stable is your job?

Google is well known for not paying their employees amazing salaries, but compensating that with stock options and restricted shares. Well in less than a year the stock options have dropped from $747 to $348. That is a 53% drop. I am sure the package is not looking as enticing to Google employees right now.

So many people rest on the security of their job, but they don’t realize that it can be gone faster than an ABC sitcom. Numerous industries have struggled since 9/11, and it has spread farther with the mortgage crisis and subprime lending. It looks like it will get worse before it gets better with the current $700 billion bailout.

You can’t count on retirement, social security, or pensions. You might be lucky to have some, but it doesn’t mean that it will be enough. It might be hard for you to believe, but one day you will be obsolete and useless to the workforce. The only way to solve this is to prepare now while you have the chance and put some dollars in the right investments and under your pillows.

This is why it is always important to have a business of some kind. Even while you are working you should have a business running on the side. Robert Kiyosaki used the term, “Mind your own business”. Always look to create an asset on the side even if you like your job enough to stay with it forever.

Why do you want to leave your job?

Think for a moment why you want to leave your job. Were you offended? Are you just plain tired of your cubicle? Are you frustrated because you are putting on weight or feel pointless in life? Not enough fantasy football preparation for your $60 pot? There are many reasons to hate doing the same thing every day for forty years.

Decide if now is the time to leave and if you are exiting for the right reasons. Any one can leave their job, but are you prepared or is this something that you are doing out of frustration for your current work situation?

Often that frustration can be fruitless for you and for your future. A successful business is not started out of anger, but in providing value with your innovations. People are not going to give you money just because you hate your boss (unless you get picked to be on some reality show).

What is your business plan?

Providing value leads to our next question and that is a business plan. Do you know exactly what it is that you want to do? Do you know who your client is and what it is that they want? Do you know then how you are going to market that to your audience? How are you funding the business?

You might need to get to know the industry and prospects a little more before you leave your job. This will give you a good idea of what they want instead of what you think they want. This will also help with any product or service creation that you will embark upon.

Create a clear path, both short-term and long-term, of what you want to accomplish and how you are going to achieve that. Set realistic income goals and work your butt off to achieve that.

Understand that business opportunities don’t always go the way you anticipate it. In fact, business plans are killed by performing a business. Which means there are always variables in business that you can never anticipate and can permanently alter your direction. Remember when we talked about BI (Business Intent)? You need to ask yourself daily, “What is the main objective that I need to accomplish today?”

How committed are the other business partners and potential investors?

It can be a nightmare to get into a business and find out that your business partners are not a good match to work with or vice versa. You have made this huge transition away from a job, only to find out that you jumped into a pool full of sharks. This is something else you are can’t anticipate, but make sure you are joining a partner because they bring value that you can’t provide on your own.

Also make sure that if you are getting venture capital that you have a contract and a solid relationship. I emphasize the solid relationship part because the truth is that contracts can be twisted and broken by corrupt businessmen. Prepare for the unexpected.

If you are franchising or starting an organized business opportunity you want to make sure that you have a disclosure agreement in writing for any home work business opportunities. This will be important for you to see all of their financial dealings, what type of branding and marketing you will receive, and also what education you will get.

How is your credit?

Not only will this be important for your business, but possibly more important for your personal finances. Business owners have a way of struggling initially until they figure out an effective business model and chances are you are going to be no different.

It might be necessary to live off of credit for a while during your start up process. This can be dangerous, but often the only option if you don’t have a lot of savings. I have a business partner that is prepared with over $100,000 over a couple lines of credit. It will allow for him and his family to live for over a year on that, but obviously that isn’t what he wants.

A lot of people shun borrowing because debt can be taxing on you physically and emotionally. The truth is that debt is one of the biggest reasons for divorces and relationship struggles. Be on the same page as the other members of your family.

If you are all willing to borrow in order to create success then do it. People borrow money for countless things that will never make them money like clothes, cars, nice restaurants, and other accessories. Why not go into debt with something that would create value?

What experience do you have running a business?

Your experience is huge. I am not just saying it is important to have a trade, but it is also necessary to have experience running a business. You have to know how to organize a business with each vital position. Create a business organization chart with each position of the company and their vital roles. Then fill in each position with the name of the person performing that role. If you are a one man show, then you are going to put your name in each one of those boxes.

When you do this you will quickly see that this could be a lot of work. Most people get in trouble because they try to be the owner (creative side), manager (delegating responsibilities from the owner), and the technician (performing the physical trade). Often people get caught up in doing all three. Now you are the same employee, but you have numerous other responsibilities on top of it.

Try to find your way out of that and just focus on the creative direction of your business. The more time you spend on creativity, the more efficient your business will be.

So What Do I Do?

That is a lot to chew on. The best thing you can do is take your time, write down a list of pros and cons, put together a thorough business plan, discuss with potential partners and investors, and make sure that you are fully ready to make the transition. In the end, it comes down to your confidence in your own abilities. There is never a wrong time to leave your job as long as you are prepared physically, emotionally, intellectually, and every other -ally that you can be to start a business.

Know that there isn’t a perfect time to leave, but there are better times. Don’t wait too long to jump into a new business. Whatever decision you make, ‘mind your business’ now so you can prepare for your future.

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Development of Malaysia’s bond market is still assured despite global turmoil

DESPITE the current turmoil in Europe and shaky prospects for the global economy, Standard & Poor's Ratings Services maintains a strong outlook for Malaysia's bond market. Our view reflects: positive bond market developments, ongoing growth in Islamic finance, and steady macroeconomic fundamentals in Malaysia.

Bond issuance in the G3 currencies (US dollar, euro, and yen) in Asia generally stalled in 2011. However, South-East Asian (Asean) local currency bond markets including Malaysia's continued to bustle in 2011 with local currency bond issues, providing alternative funding and investment options for Asian issuers and investors. It wasn't just Asean companies that tapped the markets, those in Hong Kong, India, and Korea also issued bonds in the region.

Data from the Asian Development Bank indicate that local currency bond issuance by Asean companies during the first nine months of 2011 rose 25% over the similar period in 2010. In Malaysia, the growth was just above 26%. Further, local currency bond issuances from Asean amounted to four times the issuance in US dollar, euro, and yen from the region, compared with three times in 2010.

We believe the positive trend for local currency bonds in Asia will continue. Standard & Poor's expects most Asean nations will continue to grow this year. Our 2012 forecast for Malaysia is 3.8%-4.3% real GDP growth. This is a stark contrast to our expectation that the United States will grow moderately and the European Economic and Monetary Union (EMU or eurozone) will experience a mild recession in the first half of 2012. Given this scenario, Asean companies are likely to continue to seek alternative funding sources as those in G3 markets (United States, Japan, and the eurozone) become harder and more expensive to tap. Policymakers in Asean have made significant regulatory changes and related reforms to address long-standing concerns about liquidity and diversity. Establishing legal frameworks and creditor rights, promoting higher standards of disclosure, and streamlining issuance processes (as in the July 2011 guidelines for corporate bonds in Malaysia) have stimulated the development of bond markets.

Foreign issuers and investors broaden and deepen the region's bond markets. They are attracted to the liquidity and pricing in Asean's local currency bond markets such as Malaysia and Singapore. In turn, foreign issuers help build the yield curve and establish pricing benchmarks. As more global and regional investors participate in the local currency bond markets, funding costs for issuers will reduce. At the same time, the availability and diversity of financing options will increase. Like global issuers, investors will also demand greater transparency and will be keen to see the region's credit culture strengthen further.

Within Asean, Malaysia stands out. Policymakers in emerging markets view Malaysia as a poster child for bond market development, given that it's now the fourth-largest bond market in Asia, after Japan, China, and South Korea. Malaysia's bond market has a strong infrastructure and a record of solid growth due to a transparent and predictable regulatory environment, the availability of independent credit research, the existence of “risk-free” bonds of various tenors, and a bond pricing service.

Domestic debt issuance in Malaysia is 10 times the volume of cross-border issuance by local companies. This is also due to the country's withholding taxes on cross-border issues by Malaysian companies, which make offshore bond issuance less attractive. Issuer concentration is relatively low, with the top 20 Malaysian issuers accounting for less than 50% of outstanding debt. Dominant issuers largely come from the infrastructure sector, which will continue to be a major contributor to the growth of the bond market in the next few years.Malaysia and Singapore lead Asean in providing issuers particularly in infrastructure with access to long-term finance over 10 years. In other Asean countries, debt securities with short tenors dominate. Besides making it difficult for infrastructure sector issuers to get funding, pension and life insurance funds also find it tough matching long-term investments to obligations.

Malaysia has rapidly become the Islamic finance centre for Asia with smart regulation and a growing ecosystem around Islamic finance. Approximately 70% of Malaysia's domestic debt issuance is in the form of sukuks (financial certificates, similar to bonds, that are compliant with Islamic law), making it the world's largest Islamic bond market with over 60% of global sukuk issuance originating from Malaysia. The recent RM30bil sukuk by Projek Lebuhraya Usahasama Bhd is the largest sukuk issue globally and has set the market abuzz.

Issuers are likely to seek alternatives to conventional financing, given the uncertain outlook for global credit markets. Islamic finance is one such alternative. In Standard & Poor's view, infrastructure projects are a logical fit for Islamic finance for two reasons: (1) the Islamic finance market is growing and deepening; and (2) Sharia (Islamic law) governs Islamic finance and is based on the concepts of asset-backing and shared business risk.

Malaysia pioneered the use of Sharia-compliant sukuk bonds to fund infrastructure projects and is the leader in Islamic financing. The key issue for this market, in our view, is that a lack of standardisation constrains sukuk issuance. It also deprives the market of an organised structure to facilitate secondary trading and liquidity.

Malaysia has other challenges, too. Corporate governance standards are moderate and the enforcement of governance practices could improve. Shareholder activism is limited and corporate scandals far too frequent. While the law provides for creditor protection, the process for enforcing claims can be protracted. These should be easy to fix, provided they are approached with vigour and zeal.

We are confident in Malaysia's ability to continue to develop a robust credit culture where risk can be measured and priced using objective standards. Standard & Poor's is assisting in this area via independent and objective credit research. In 2009, we launched our regional Asean rating scale, which provides more granularity of credit risks than is possible with the Standard & Poor's global scale.

In our view, the Malaysian capital market is on the right path to creating debt platforms that will deliver the depth and sophistication needed to fund the next stage of economic development. But local policymakers cannot take their foot off the pedal. A sustainable supply of credit and associated reforms will be critical. Without them, growth could be constrained.

Surinder Kathpalia is the managing director of r's in Singapore.

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