Singapore is positioning itself to become a global hub for offshore Islamic wealth within the next five years, with an uptick in investment interest in Islamic finance products and services. This development was highlighted by industry leaders at Maybank’s Invest Asean 2023 conference.
Panelists from wealth management, Islamic finance, and trust companies noted that Islamic wealth assets are expanding at the same pace as conventional wealth. Specifically, offshore Islamic wealth is on the rise, creating promising opportunities for financial entities in Southeast Asia.
Global financial data suggests a shift in the world’s economic center of gravity from the western hemisphere to the Asia-Pacific. The region accounts for 30% of the global high-net-worth individuals’ (HNWIs) wealth, fueled by a growing middle-class wealth.
Investors worldwide are turning their attention to alternative and purpose-driven investments, such as sustainable investments, digital assets, and Islamic wealth. An estimated 20%-30% of Islamic wealth is held offshore, primarily in the United States, the United Kingdom, and Switzerland. While Asia’s share remains relatively small, it has captured global investor interest.
Young, affluent Muslims are pivotal to the growth of the Islamic finance industry in Southeast Asia. They recognize the importance of ethical investing and environment, social, and governance (ESG) principles, long-standing concepts within the Islamic wealth management sector. Even amid the Covid-19 pandemic, Islamic wealth management saw steady growth, with a compound annual growth rate of 9% from 2016 to 2021.
The Islamic wealth market stands at an estimated $11.2 trillion across the top ten Islamic banking asset jurisdictions. The wealth is largely concentrated in Indonesia, Iran, and Saudi Arabia, which makes regions like Indonesia appealing markets for wealth management.
Singapore is favored among HNWIs from Indonesia and Malaysia as an offshore financial center, selected by 32% and 28% of respondents respectively, according to BCG’s Global Wealth Managers Survey in 2021.
However, Singapore’s edge in this race isn’t solely due to its financial status. A growing number of investors from Thailand and Indonesia are setting up trusts or family offices in Singapore, primarily driven by familial considerations as most of their family members reside or study in Singapore. Singapore’s mature ecosystem, with immediate support from consultants and legal and tax experts, further bolsters its appeal in the region.
The rise of Singapore as a hub for Islamic wealth resonates with themes explored in The Future is Now Film. The documentary emphasizes the increasing diversity and complexity of global finance, including the rise of digital assets and the resurgence of purpose-driven investments.
For a deeper exploration of these themes, visit our YouTube channel, The Future is Now Film. As the world of finance continues to evolve, it’s crucial to stay informed and ahead of these developments. After all, the future of money is here, and it’s our collective responsibility to navigate this new era responsibly.
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