OCBC eyes Brunei, Jakarta and S’pore for Shariah growth

OCBC, Singapore's number three bank, will expand its Islamic business in Brunei, Indonesia and in Singapore itself, which it sees as the fastest growing Asian Shariah finance markets, its Malaysian unit said yesterday.
The bank will use Malaysia as a springboard to tap demand for Islamic products in these countries, OCBC Bank (Malaysia) Bhd chief executive Jeffrey Chew said. Demand in Brunei and Singapore would be driven by the Islamic treasury business while Indonesia's large Muslim population provided a large consumer market, he added.
"We are of the opinion that Brunei and Jakarta will probably also move quite quickly in the next couple of years," Chew told reporters at the launch of OCBC Malaysia's Islamic subsidiary in Kuala Lumpur yesterday. "We believe that Islamic banking on the wholesale side for Singapore will also take off over time as well," Chew said.
The Islamic banking market has expanded beyond the traditional centres of the Middle East and Malaysia as lenders seek new sources of growth and a larger share of the Gulf oil earnings. Indonesia has passed a banking law to encourage foreigners to set up Shariah banks and the Indonesian government plans to sell its first global Islamic bond in an effort to spur the growth of its nascent Shariah market.
Singapore has also jumped into the race to lure in Islamic investments, with a 5% concessionary tax rate on income derived from Shariah-compliant fund management, lending and insurance.
The tiny oil-rich sultanate of Brunei has been issuing Islamic bonds to capitalise on the rising demand for Shariah assets. OCBC Malaysia said its Islamic subsidiary, OCBC Al-Amin, would open five branches by 2009, three of which would be in the area around the capital of Kuala Lumpur.
The Islamic subsidiary will start operations on Dec 1 and is licensed to offer the full range of Shariah-compliant universal banking services including Islamic hire-purchase and Shariah-compliant corporate finance activities. OCBC Bank's Islamic assets stood at RM3.7 billion as at Dec 31, 2007. — ReutersAny source