(Insider Stories) – Indonesian state-owned brokerage firm Mandiri Sekuritas plans to help arrange two local companies to issue ringgit-denominated Islamic bonds in Malaysia later this year, its senior executive said.

Iman Rachman, managing director at Mandiri Sekuritas, said it recently signed an agreement with a unit of Kuala Lumpur-listed RHB Capital to cater demand for sharia-compliant instruments. Under the agreement, RHB will sell Mandiri Sekuritas’s products through its network.

Indonesia has the biggest Muslim population in the world, however its Islamic finance industry significantly lagged behind Malaysia, the biggest market for Islamic bonds, or sukuk, in Southeast Asia.

Part of the reason is Malaysia’s head start and focus to develop the industry since the 1970s compared with Indonesia which begun in mid 2000.