MALAYSIA continues to forge the way ahead in Islamic economy and finance, leading the way for the eighth consecutive year based on the ranking by the Global Islamic Economy Indicator.
Its burgeoning Islamic FinTech and economy sectors continue to flourish, with the aid of the government and the continuous push by the Malaysia Digital Economy Corporation (MDEC) to expand the digitalisation of the economy and aggressive creation of a conducive ecosystem, for which it can thrive on.
For years, the Malaysian government has identified Islamic finance and Islamic digital economy as key economic growth activities to achieve and maintain its position as a global Islamic fintech hub.
Malaysia is the largest sukuk issuer in the world, in addition to having one of the best halal standards globally. “These global recognitions have paved the way for Malaysia to continue to lead as the global Islamic fintech hub, and towards becoming the heart of digital Asean.
With our strong digital economy ecosystem within the Organisation of Islamic Cooperation member nations, we have a comparative advantage over others in providing Shariah-compliant Islamic finance and fintech services globally.
“We are extremely proud of our leadership position, and MDEC will continue to work with financial regulators and industry partners from all relevant areas to further enhance our capabilities, facilities and capacities to ensure we maintain our global leadership position,” said MDEC vice-president of the Digitally-Powered Businesses division, Gopi Ganesalingam.
According to the State of the Global Islamic Economy Report 2019/20, Muslims are expected to spend US$2.4 trillion (RM9.1 trillion) by 2024, up from US$2.2 trillion in 2018.
The report also revealed that 66% of consumers are willing to pay more for ethical products while a report from Thomson Reuters projected Shariah-compliant assets worldwide will reach US$3.8 trillion by 2022.
On top of the recently signed Regional Comprehensive Economic Partnership Agreement, which created the world’s largest trading bloc, Malaysia stands to capture 30% of the world population.
A new economic frontier has opened up for Malaysia. “To continue stimulating growth in the Islamic digital economy, a collective effort and commitment from various parties will be crucial to identify opportunities, issues and challenges. Effective collaboration will improve innovation.
The key towards achieving inclusive financial growth is to make a strong effort to embed Fourth Industrial Revolution technologies, like Islamic fintech, to ensure fair and equitable distribution across income groups, and shared prosperity for all, in line with the recently-announced Malaysia Digital Economy Blueprint and Malaysia 5.0,” said MDEC chairman Datuk Wira Dr Hj Hussin Mohamed Ariff.
Malaysia’s excellent track record in fundraising augurs well overall, with the Securities Commission reporting a 130% increase in 2018, involving 1,449 SME (small and medium-sized enterprises), 18,700 investors (91% increase), and 5,612 campaigns (131% increase) launched.
The Islamic capital market grew by 8%, to RM2 trillion, outpacing overall capital market growth of 3%. Malaysia also offers the perfect platform for Islamic fintech companies to roll out their product offerings before tapping into other Muslim-majority countries.
Bank Negara Malaysia (BNM) and the Securities Commission have allowed innovation in fintech to proliferate such expansion.
The government, through MDEC, have implemented various measures and initiatives.
In partnership with regulators, agencies, corporations, financial institutions, accelerators and other relevant bodies, MDEC continues to roll out and introduce plans and programmes to conquer this new economic opportunity.
One such initiative is the Digital Financial Inclusion, which is aimed at improving the B40 (bottom 40% earners) and micro SME’s knowledge on financial services.
The collaborative programme, in partnership with 11 fintech companies, have on board 2,300 users from three main product offerings, mainly micro-financing, micro-investment and micro-insurance.
While FinTech Booster, in collaboration with BNM, is a capacity-boosting programme by MDEC to assist fintech companies, both local and international, to develop their products and services via three strategic modules: Legal and Compliance, Business Model and Technology.
Since its launch, there have been six public and 19 private workshops conducted with over 400 registrations as of March 2021, on the website, ranging from both local and foreign companies.
The second pillar, to be launched this year, will be on market access and business opportunities for fintech, and the third, technological integration.
Malaysia has all the right makings and ecosystem to make it the global Islamic fintech hub, which includes having a matured Islamic finance environment, and conducive and cost-effective business setting.
It is also blessed with talents, from world-renowned academicians, Shariah scholars to Islamic finance experts, as well as a steady stream of local and international talent pool in fintech and Islamic finance.
With Malaysia ready and waiting, all these factors bode well for the country to stay in the driver’s seat in the Islamic finance Wave 2.0.
MDEC is a government agency under the purview of the Communications and Multimedia Ministry entrusted to lead Malaysia’s digital economy forward.