PETALING JAYA: The Securities Commission's (SC) prediction of a RM3.3 billion to RM7.7 billion inflow into syariah funds via the Private Retirement Scheme (PRS) will mean a richer treasury for the nation.
Asian Strategic Leadership Institute's (Asli) Centre for Public Policy Studies chairman and economist Tan Sri Ramon Navaratnam told The Malay Mail that with such a fund available domestically, there was no need for Malaysia to borrow money from abroad.
"This will enable higher savings for the national economy and provide the government with greater opportunity to borrow domestically for budgetary purposes," he said.
Navaratnam said with that the nation would not be at the mercy of currency speculation and fluctuations, granting the nation a "more stable borrowing" scheme.
He said SC's projected influx of cash could establish Malaysia as a major centre for Islamic banking.
"In terms of Islamic banking, Malaysia is one of the major players and this scheme can assist in promoting the system to the world. So, there are many advantages to this scheme which one has to recognise," he said.
He said contributors of the PRS syariah system would be "well protected" because the government was keen to promote Islamic finance.
Ram Holdings group chief economist Dr Yeah Kim Leng believed the syariah--compliant system would create a stronger economic cycle.
"The funds contributed will be channelled to business enterprises, of which its revenue will go to shareholders besides generating employment," he said.
"Employees who contribute will also benefit with more money, better savings.
"New employment means cycle employees who will add on to the funds. This creates a virtual cycle where everyone will benefit in a win--win situation."
However, Yeah said the flipside to the high returns was the high risks involved.
"When you have greater returns in your investment, you also have high risk factor. However, Islamic financing is known to mitigate or nullify the risks to one's investments as it does not go into high risk enterprises such as gambling or alcohol," he said.
"Syariah--compliance financing is known to go into blue chip companies and what can be termed as 'safe' industries and enterprises.
In the short term, Yeah said depending on how much contribution to be channelled into PRS, a large part of it would be invested in Syariah funds for it to create demand, the demand for safe and high yielding fund.