The Economy of Malaysia
Islamic Finance and Savings
Malaysia is a global centre for Islamic finance and has large pension and savings pools such as the Employees Provident Fund.
Finance has a distinctive flavour.
Islamic finance
Products follow Sharia principles, such as no interest, and use profit-sharing and asset-backed structures.
Sukuk
Islamic bonds called sukuk are issued by governments and firms.
EPF
The Employees Provident Fund holds compulsory retirement savings of workers.
Role
These pools give Malaysia deep domestic capital markets.
A sukuk
A firm raises money by selling certificates backed by assets and sharing the returns.
Assuming Islamic finance means no returns
Returns come through different structures.
Key takeaways
- Malaysia is an Islamic finance centre.
- Sukuk are Islamic bonds.
- EPF holds compulsory savings.
- Domestic markets are deep.
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