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 (GIEI). Its burgeoning Islamic FinTech and economy sectors continue to flourish aided by governmental support and Malaysia Digital Economy Corporation’s (MDEC) continuous push to expand the digitalisation of the economy and an aggressive creation of a conducive ecosystem for which it can thrive on.
For years, the government of Malaysia has identified Islamic finance and Islamic digital economy as Key Economic Growth Activities (KEGA) towards achieving and maintaining its position as the global Islamic FinTech hub. Malaysia is the largest Sukuk issuer in the world as well as having one of the best Halal standards globally.
“These global recognitions pave 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 (OIC) member nations, we have 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 Mr Gopi Ganesalingam, MDEC Vice President, Digitally-Powered Businesses division.
According to the State of the Global Islamic Economy Report (GIER) 2020/21, Muslims are expected to spend US$2.4 trillion by 2024, up from US$2.2 trillion in 2018. GIEI 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 (RCEP) Agreement which created the world’s largest trading bloc, Malaysia stand to capture 30 per cent 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 have a strong effort to embed Fourth Industrial Revolution (4IR) technologies like Islamic FinTech to ensure fair and equitable distribution across income groups and a shared prosperity for all in line with the recently-announced Malaysia Digital Economy Blueprint (MyDIGITAL) and Malaysia 5.0,”said Datuk Wira Dr. Hj. Hussin Mohamed Ariff, Chairman of MDEC.
Malaysia’s excellent track record in fundraising augurs well overall, with the Securities Commission reporting a 130 percent increase on 2018 involving 1,449 SMEs, 18,700 investors (91 percent increase) and 5,612 campaigns (131 percent increase) launched. Islamic capital market grew by eight percent, to RM2 trillion, outpacing overall capital market growth of three percent.
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 (Malaysia Central Bank) and the Securities Commission have allowed for innovation in FinTech to proliferate such expansion.
The Malaysia 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 knowledge of the B40 (bottom 40 percent earners) and micro SMEs on financial services. The collaborative programme, in partnership with 11 FinTech companies have onboarded 2,300 users from the three main product offerings mainly the 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 workshops and nineteen 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 have all the right makings and ecosystem to make it the global Islamic FinTech hub which includes having a matured Islamic finance environment and has a conducive and cost-effective business setting. It is also blessed with talents, from having 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. All these factors bode well in maintaining its driving seat in the Wave 2.0 of Islamic finance. Malaysia is ready and waiting.
This article is produced and sponsored by MDEC. It was first published in the Global Islamic Fintech Report 2021 produced by DinarStandard and Elipses. The report can be downloaded from here.