FIMM seeks tax-exemption on Islamic funds for 3 more years

CEO Nazaruddin Othman said the tax exemption has been one of the key boosters for the Islamic fund industry in Malaysia ‎since it was granted in 2008.

The current tax exemption, which consists of 25 percent corporate tax, will end by 2016.

"In terms of percentage of Islamic funds against the total net asset value (NAV), it is still relatively low at only 14 percent, so we still have that impetus to grow the Islamic funds further.

"The Islamic fund growth rate has actually been better than the conventional for the last three to four years, growing by about 14-16 percent annually as compared to about 10 percent for conventional," he told a press conference at the FIMM Annual Convention here Tuesday.

He said the current demand for Islamic funds is also very encouraging due to some investors' reluctance to get exposed to finance-based stocks in their investment portfolio.

Nazaruddin said he expects the take-up for the Private Retirement Scheme (PRS) to maintain its momentum despite the current economic challenge.

"The potential to grow the PRS is great. This (the PRS) is the third pillar for retirement purposes that the government has come up with, after the pension and the Employees Provident Fund.

"I think the NAV of the PRS will continue to grow due to some hindrance for them to take out their money easily," he added.

He said the Private Pension Administrator Malaysia and FIMM will continue to hold awareness programmes to promote the PRS and its benefits to retirees.

Earlier in his speech, Nazaruddin said Malaysians may need to rely on the investment management industry, whether for retirement or a college education, in order to generate the returns they need.

"Through unit trust or PRS, an individual can easily and cheaply assemble a diversified portfolio of investments that provides exposure to a variety of asset classes," he said.