Development of Islamic Banking and Finance in Singapore
FOUNDATION OF ISLAMIC FINANCE
ISF 1101
SEMESTER 2 2013/2014
DEVELOPMENT OF ISLAMIC BANKING AND FINANCE
IN SINGAPORE
INTRODUCTION
Singapore or officially known as the Republic of Singapore is an island city-state which situated in the Southeast Asia specifically lies off the southern tip of Malaysia peninsular. The total area of Singapore is 716.1 square kilometres or 270 square miles and it accommodates approximately 5,599,200 citizens and 823,082 of them are consists of Muslims. Muslims in Singapore are about 14% out of the population numbers and are amongst the minority society.
In the context of economy, Singapore is a trade-oriented market economy that basically practices conventional banking system. However, the Islamic banking system has slowly entering the Singapore banking system since the year 2005. The Islamic banking system was not rapidly executed nor accepted because the conventional banking sector has developed well over the period of time. The Monetary Authority of Singapore (MAS) is the responsible entity in helping the progress of Islamic finance in the country. The table provided below is to show some of the comparison between conventional banking system and Islamic banking system in Singapore.
CONVENTIONAL BANKING SYSTEM
ISLAMIC BANKING SYSTEM
Additional buyer’s stamp duty needs to be paid off by certain groups of people that want to obtain real estates.
Additional buyer’s stamp duty for certain Islamic transactions involving real estates is removed.
Using the usual structures used for tax treatment in conventional banking system.
Using Murabaha, Mudaraba, and Ijara wa Igtina structures on the tax treatment for Islamic financing since 2006.
Contribute 75% for annual growth rate of Singapore.
Contribute 15% for annual growth rate of Singapore since established and still growing at a fast rate.
BACKGROUND
Singapore is a highly developed trade-oriented market economy. Singapore's economy has been ranked
ISF 1101
SEMESTER 2 2013/2014
DEVELOPMENT OF ISLAMIC BANKING AND FINANCE
IN SINGAPORE
INTRODUCTION
Singapore or officially known as the Republic of Singapore is an island city-state which situated in the Southeast Asia specifically lies off the southern tip of Malaysia peninsular. The total area of Singapore is 716.1 square kilometres or 270 square miles and it accommodates approximately 5,599,200 citizens and 823,082 of them are consists of Muslims. Muslims in Singapore are about 14% out of the population numbers and are amongst the minority society.
In the context of economy, Singapore is a trade-oriented market economy that basically practices conventional banking system. However, the Islamic banking system has slowly entering the Singapore banking system since the year 2005. The Islamic banking system was not rapidly executed nor accepted because the conventional banking sector has developed well over the period of time. The Monetary Authority of Singapore (MAS) is the responsible entity in helping the progress of Islamic finance in the country. The table provided below is to show some of the comparison between conventional banking system and Islamic banking system in Singapore.
CONVENTIONAL BANKING SYSTEM
ISLAMIC BANKING SYSTEM
Additional buyer’s stamp duty needs to be paid off by certain groups of people that want to obtain real estates.
Additional buyer’s stamp duty for certain Islamic transactions involving real estates is removed.
Using the usual structures used for tax treatment in conventional banking system.
Using Murabaha, Mudaraba, and Ijara wa Igtina structures on the tax treatment for Islamic financing since 2006.
Contribute 75% for annual growth rate of Singapore.
Contribute 15% for annual growth rate of Singapore since established and still growing at a fast rate.
BACKGROUND
Singapore is a highly developed trade-oriented market economy. Singapore's economy has been ranked