Jacqueline Loh: Enhancing linkages between Asia and the Middle East Welcome address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the 6th World Islamic Banking Conference Asia Summit, Singapore, 3 June 2015. *  *  *  Your Excellencies, distinguished guests, ladies and gentlemen, good morning. To all our foreign guests, a warm welcome to Singapore Introduction 1. I am very honoured to be invited to deliver the Welcome Address for the 6th World Islamic Banking Conference Asia Summit. I am pleased that this conference continues to attract a growing number of industry professionals from Asia and the Middle East, with total attendance more than doubling since it was launched in 2010. This underscores the bright prospects for Islamic finance in Asia. Growing Asia-Middle East connectivity 2. Trade and investment flows between Asia and the Middle East have grown substantially over the last decade, supported by strong domestic demand and investment opportunities in both regions. This growing connectivity is expected to strengthen in the coming years, notwithstanding uncertainties in the global outlook. Let me share 3 key observations. 3. Firstly, trade between the two regions continues to grow strongly. In the past decade, exports from the Gulf Cooperation Council (GCC) to Asia expanded five-fold, and growth of GCC’s exports to Asia has surpassed that to the rest of the world. Asia’s exports to GCC have also increased five times, registering an annual growth rate of 15% over the past ten years. 4. Secondly, inter-regional investments are growing.

Singapore has already concluded a comprehensive FTA with the GCC, which recognises Islamic finance in the definition of financial services. Cross-border Islamic finance set to grow 6. The global Islamic finance industry has been on an upward trajectory in the past decade, with total assets exceeding $ trillion in 2014, from $ billion in 2005. Most of this demand stemmed from Middle East and Asia, and stronger trade and investment linkages between these regions will reinforce the growth momentum in Islamic finance. Looking ahead, the following key trends will also augur well for the outlook for cross border Islamic finance: 7. First, increasing wealth accumulation in the Middle East region. This will expand the pool of Islamic funds seeking diversification into foreign investments. Asia will be a key investment destination, as stronger growth prospects compared to developed economies present opportunities for higher investment returns, which would in turn, increase the demand for Shariah-compliant assets in Asian markets, including Singapore, Malaysia and Indonesia. Reflecting this trend, GCC banks have already been expanding their operations in Singapore in recent years to support the deployment of Islamic funds to corporates in the region, through Islamic bank financing, and sukuk issuances. 8. Second, more countries are boosting their Islamic finance services and capabilities, in response to the growing demand for Islamic finance solutions. Singapore, for instance, has seen a steady increase in Islamic finance activities, while Hong Kong has recently issued its second sukuk and Japan is amending its financial regulations to facilitate Islamic financing. 9.