KUALA LUMPUR, Aug 16 2022 – Sultan of Perak, Sultan Nazrin Muizzuddin Shah said that industry players should consider creating an ASEAN institution of Islamic finance to facilitate inward foreign investment to finance infrastructure and similar projects in the region.
“These could help to stimulate trade and boost employment, something that is very necessary given the large populations of many ASEAN nations,” he said in his royal address at the opening ceremony of the 17th Kuala Lumpur Islamic Finance Forum (KLIFF) today.
“Global economic activity continues to shift eastwards. We have seen the continued growth and expansion of consumer markets in the region, the formation of extensive trade networks and the creation of an increasingly business-friendly environment in the region,” he said.
According to Sultan Nazrin, the Islamic finance sector can both participate in and promote further growth across ASEAN through its role in galvanising investment with a focus on social value-creation.
Sultan Nazrin also said that Malaysia has long been recognised as a global leader in Islamic finance, and its progress has continued despite the challenging global financial and economic environment.
Despite global challenges brought about by the pandemic and war in Ukraine, he said that Malaysia’s capital market remained resilient, including the Islamic capital market which grew by 11 per cent in 2020, up from 8.0 per cent in the previous year.
By June 2022, the Islamic capital market was worth an estimated US$500 billion and Shariah-compliant securities now account for nearly 80 per cent of the listings on Bursa Malaysia, he said.
Malaysia continues to lead the Sukuk market internationally, with about 40% of the world’s outstanding Sukuk and in June 2022, it accounted for nearly 30% of all Sukuk issuance globally. In terms of Islamic funds, Malaysia remains among the top three countries worldwide, with over 22% of total assets under management globally, as of the end of 2021, he said.
Sultan Nazrin noted that Malaysia is also becoming a leading centre for Islamic fintech and as of August 2022, 47 Islamic fintech companies are operating in Malaysia compared to 41 in Indonesia, 29 in the United Arab Emirates and 29 in Saudi Arabia. Conventional fintech state-ups have also recently ventured into the Islamic space in Malaysia, he added.
His Highness said that accelerated adoption of fintech applications has been one of the unexpected consequences of the Covid-19 pandemic.
“Islamic fintech transactions are expected to reach US$125 billion by 2025, up from US$49 billion in 2020. This robust growth of 21% a year will be driven by the provision of financial services to currently unbanked and underserved populations and sectors, including small and medium enterprises, and micro businesses,” His Highness said.
Sultan Nazrin said that fintech will also be used to develop innovative solutions, including the halal economy and in-value chain financing.
“By enabling issuers, investors and intermediaries to access existing and new markets in a more efficient and cost-effective manner, they serve to accelerate growth. These developments demonstrate the important role that a technology-enabled Islamic capital market can play as a catalyst for economic recovery and inclusive growth,” Sultan Nazrin said.
According to him, Islamic finance has thus become an important component of the overall Malaysian financial system, contributing ti the growth and development of our economy.
“What is required is for us to ensure that existing policy frameworks can accommodate innovation. Where necessary, we should refresh our policy statements and develop new strategies.
He said other jurisdictions include introducing dynamic and robust policies and strategies, aimed at powering the expansion of Islamic finance within their borders and beyond.
“We must also continue to innovate, to develop our institutions and do all that is necessary to sustain our leading position in this sector,” he added.
— Akses Malaysia
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