The Labuan International Business and Financial Centre (Labuan IBFC), a special economic zone in Malaysia’s Labuan, plans to issue Shariah compliant digital security tokens this year, through its newly launched Islamic Digital Asset Centre (IDAC).
Shahruladeri Mohamad Adnan, an active player in Labuan’s Islamic finance industry who is currently CEO of CIB Capital and formerly the director of business development for the Labuan IBFC, confirmed as much with IFN. “There has been some interest in Sukuk to be issued digitally, and 2023 can be an exciting (year for that).”
The Labuan IBFC explained that the instruments, similar to Sukuk, are Shariah compliant security token offerings, which are asset-backed tokens, which allow illiquid assets to be liquid through digitalization via blockchain. The offerings will be available in the IDAC marketplace.
The launch of the IDAC by the Labuan IBFC is a very significant move to position Labuan as an important Islamic digital asset centre in the region. “Being an international financial center, we must demonstrate that we have the capability to be a platform that promotes a very effective Islamic capital market. The IDAC, coupled with the newly launched Labuan Islamic/ESG digital exchange, would be an important attraction for international investors.”
Most importantly, there currently isn’t a similar platform in the Asian market, Aderi noted.
But more work needs to be done. “The critical success of Labuan’s Sukuk market lies in a strong, relevant ecosystem. Digital Sukuk issuances need competent advisors and arrangers. Players in the Sukuk market will need good access to Islamic liquidity. Some investors may also want to trade in a secondary market.”
Aderi acknowledges that these may not be easy to achieve, but they would certainly enhance and support the Labuan IBFC’s plan to be a hub for Islamic finance.
This is an excerpt of an IFN interview with Shahruladeri Mohamad Adnan, CEO of CIB Capital. To listen to the full discussion on Labuan’s Islamic finance market, log on to IFN Podcast.