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KUALA LUMPUR, Aug 16 (Bernama) — Malaysia needs to ensure its existing policy frameworks can accommodate innovation to accelerate growth in Islamic finance and sustain its leading position in the sector, said Sultan of Perak, Sultan Nazrin Muizzuddin Shah.
His Royal Highness said Islamic finance is an important component of the overall Malaysian financial system, contributing to the growth and development of the economy.
“Where necessary, we should refresh our policy statements and develop new strategies.
“Other jurisdictions are introducing dynamic and robust policies and strategies, aimed at powering the expansion of Islamic finance within their borders and beyond,” he said in his royal address at the 17th Kuala Lumpur Islamic Finance Forum 2022 (KLIFF) today.
According to the Islamic Finance Development Report 2021, Malaysia ranks as the leader among 135 countries, based on Islamic Finance Development Indicators.
Sultan Nazrin said Malaysia continued to lead the Sukuk market internationally, with about 40 per cent of the world's outstanding Sukuk.
In June 2022, Malaysia’s Sukuk accounted for nearly 30 per cent of all Sukuk issuances globally, he said.
In terms of Islamic funds, Malaysia remains among the top three countries worldwide, with over 22 per cent of total assets under management globally as of end-2021.
His Royal Highness noted that Malaysian banks have also been appointed as the arranger and lead administrator of state-owned Sukuk for other jurisdictions, including Turkiye and Hong Kong — signalling that Malaysia is being internationally recognised as a leader in Islamic finance.
“The government's plans to promote Islamic finance talent and human capital development in our higher education institutions could help to provide the expertise necessary to elevate the sector further.
“Thus, Malaysia offers a complete package to become an Islamic finance centre that should be able to maintain and expand its position,” he said.
Sultan Nazrin said Malaysia is also becoming a leading centre of Islamic financial technology (fintech), and conventional fintech start-ups have also ventured into the Islamic space in the country.
As of August 2022, there are 47 Islamic fintech companies operating in Malaysia, compared to 41 in Indonesia, 29 in the United Arab Emirates, and 25 in Saudi Arabia.
He said Islamic fintech transactions are expected to reach US$128 billion by 2025, up from US$49 billion in 2020.
“This robust growth of 21 per cent per annum will be driven by the provision of financial services to currently unbanked and under-served populations and sectors, including small and medium enterprises and micro businesses,” he added.
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