Investments into the GCC are being driven by several positive factors: infrastructure development to cater for its hydrocarbon sector, rapidly-growing populations, market liberalisation and diversification beyond oil and gas. A 2014 industry survey 1 by Mergermarkets highlighted that investments from Asia into the GCC would soon equal that traditionally sourced from Europe, as Asian companies become more active in the Middle East. The converse is also true. Attracted by Asia’s good growth prospects, GCC investors have increased their investments not just in energy markets, but also in telecommunications, finance, and other industries in Asia. For instance, GCC state-owned oil firms have been investing in ASEAN energy sectors, while GCC Sovereign Wealth Funds (SWFs) are also showing interest in the agriculture sector across ASEAN. 5. Thirdly, continued growth of GCC and Asian economies, and an expanding network of Free Trade Agreements, will reinforce connectivity between the regions. Notwithstanding more volatile and lower oil prices, the IMF expects the GCC to expand 3.4% in 2015 2, and 3.2% in 2016. Asia will remain the world’s fastest growing region, recording 5.6% growth in 2015, before easing slightly to 5.5% in the following year. Trade and investment linkages will be strengthened with the conclusion of trade discussions between GCC and China, Korea,  1  Gulf Cooperation Council (GCC) Investment Outlook 2014, Mergermarkets. 2  IMF Regional Economic Outlook Update for Middle East & Central Asia, May 2015. BIS central bankers’ speeches  1  India, Pakistan, Malaysia and ASEAN.

Third, there is scope to extend Islamic finance solutions to meet infrastructure financing needs in Asia and in the Middle East. In particular, the Asian Development Bank (ADB) has been working with the Islamic Development Bank (IDB) to provide Islamic infrastructure financing solutions to their member countries in these two regions. This includes developing and participating in innovative financing structures such as the Islamic Infrastructure Fund and the International Islamic Liquidity Management Corporation. The IDB is also exploring a potential link-up with the planned Asian Infrastructure Investment Bank (AIIB). This could spur the use of sukuk to fund some of Asia’s infrastructure needs, and tap a growing pool of Islamic investors across the Middle East and Southeast Asia. Islamic finance in Singapore 10. As an international financial centre and one that serves as a gateway for investments into Asia, Islamic finance is an important asset class that complements Singapore’s strong conventional financing and capital market capabilities. Islamic finance activities in Singapore are broad-based, covering Islamic banking, asset management and capital markets, which mirror our conventional strengths: •  Islamic banking assets in Singapore have grown by 73% since 2010, and are increasingly cross-border in nature. Consistent with the pattern for conventional finance, Islamic banking liabilities sourced from the region are subsequently deployed to Southeast Asia and the GCC;  •  Assets under management have also risen, by 22% since 2010. Singapore is home to Sabana REIT, which is the largest Islamic REIT globally by asset size.