19/06/2008 (Bernama), Kuala Lumpur - Bursa Malaysia will unveil two new products in the first quarter of next year, of which one of them will be Palm Oil-based Commodity Murabahah (POCM).

Second Finance Minister, Tan Sri Nor Mohamed Yakcop, said leveraging on Malaysia's competitive position in the crude palm oil market, POCM would serve as the underlying instrument in Islamic finance and capital market products.

"Although such commodity-based transactions are much used in Europe and West Asia, a crude palm oil-based Murabahah will be a first for Malaysia.

"I am pleased to note that Murabahah has received strong support from producers who have committed about RM600 million worth of crude palm oil to be used as the underlying commodity to support this initiative.

"This amount is expected to reach RM1 billion by year-end," he said in his keynote address at the Malaysia Islamic Capital Market Conference 2008 here today.

Nor Mohamed was confident the new infrastructure would be further expanded to support multi commodities in meeting demands of the international market.

On the second product, he said Bursa Malaysia would introduce a syariah-compliant securities, borrowing and lending (SBL).

He said the SBL would use the convention of 'waad' to support the creation and redemption of Islamic exchange-traded funds (ETFs).

"Through this syariah alternative SBL infrastructure, Bursa Malaysia hopes to match the needs of issuers with investor requirements. This will also complement the Islamic capital market by providing an end-to-end syariah-compliant solution.

"We look forward to this syariah alternative SBL providing further impetus for the development of the Islamic ETF market," he added.

Nor Mohamed said both the new products were currently being developed by Bursa Malaysia.

He said Malaysia has emerged as the largest sukuk or Islamic bonds market in the world with more than 60 percent share.

"Total assets of the global Islamic financial system had today surpassed US$1 trillion (US$1=RM3.25), about five times more than what it was five years ago.

"Islamic finance is now one of the fastest growing sectors with an estimated annual growth of 20 percent. Malaysia has taken advantage of this development and has emerged as a major global force in Islamic finance.

"We have become a centre for the origination, distribution and trading of sukuk and has led in innovative landmark issuances, such exchangeable sukuk," he said.

Citing the success of the largest sukuk issued by a Malaysian firm recently, he said this would strategically place the country as a hub for Islamic finance.

"The sukuk was issued by a Malaysian telecommunications company and amounted to US$4.7 billion. Despite the US sub-prime crisis, it was two times oversubscribed, indicating the depth of the Malaysian Islamic bond market.

"This development is further testimony of Malaysia's competitiveness as a global hub for Islamic finance," he said.