Why has Islamic finance stalled in Singapore?

Sultan Mosque in Singapore

It is 14 years since Singapore’s then senior minister Goh Chok Tong announced the government’s intention to make the island state a hub for Islamic finance.

The years since have seen a revamp of the regulatory framework, tax equalization laws and membership of global Islamic finance bodies, but industry figures still talk about Singapore in terms of potential rather than progress.

“Singapore has not really capitalized as it should have done given the strength of its financial system,” says Adnan Chilwan, group chief executive officer of Dubai Islamic Bank (DIB), speaking at the IFN Forum Singapore, at a panel moderated by Euromoney on Thursday.

“When we were looking at expanding our operations in Far East Asia, we were contemplating between Malaysia and Indonesia, and to be honest Singapore was not on the list,” he says.

“It’s not because it does not have a stable financial system: it has a lot of ability, including the required infrastructure and regulation, but it does not have the intention of really tapping Islamic wealth and liquidity.”