Islamic Finance Gains Momentum In ASEAN, Reflecting Wider Appeal And Interest - BNM
KUALA LUMPUR, March 31 (Bernama) -- Islamic finance has gained momentum in ASEAN with emphasis on value-based principles, balanced risk-reward considerations and wider benefits for society and the environment as global interest in ethical and sustainable finance expanded, says Bank Negara Malaysia (BNM).
The central bank said Islamic finance's offering also speaks to a growing demand of the grouping for financial solutions that create long-term propositions beyond profits.
What began as an offering aimed primarily at meeting the needs of Muslim consumers has evolved into a dynamic segment of the regional financial system, BNM said in its Annual Report 2025 released today.
“Increasing demand for shariah-compliant solutions, given the range of diverse options and stronger policy support across several ASEAN economies are the main forces driving this growth.
"Since 2014, Islamic financial assets in ASEAN have more than doubled from US$468 billion to US$954 billion in 2024. Importantly, the growing rise of Islamic finance is also evident in countries such as Singapore and the Philippines – largely non-Muslim societies, reflecting its wider appeal," said the central bank.
BNM said that more recently, Islamic finance has increasingly been channelled toward green and transition-related activities.
“Indonesia and Malaysia collectively contribute 45 per cent share of the global sustainable and responsible investment (SRI) and environmental, social, and governance (ESG) sukuk outstanding in 2024.
“This reinforces the sector’s alignment with broader ESG objectives and strengthens its role as a catalyst for sustainable development. Building on this momentum and recognising the importance of SMEs in the economy, we developed practical tools to support their transition,” said BNM.
Apart from that, amid the growing size and maturity of key segments within Islamic finance ecosystems in ASEAN, the central bank said cross-border sukuk issuances, investment flows and financial partnerships begin to also support greater regional integration.
This integration is important to broaden the pool of market participants, diversify instruments, deepen liquidity and mobilise capital flows across the region.
“As of 2025, nine participants from ASEAN took part in Malaysia’s commodity trading platform, known as Bursa Suq Al-Sila’ (BSAS), with a combined transaction value of RM55.9 billion for the year.
"Their participation in BSAS primarily supports their operations for shariah-compliant financing, deposit taking and investment activities," it said.
BNM pointed out that Islamic finance in ASEAN remains a journey in progress with its future depending on collective advancement rather than the performance of any single market.
"Regulatory cooperation will be vital, alongside a deeper engagement among regulators to support cross-border activities while simultaneously safeguarding financial stability. Stronger collaboration among market participants will also be essential," said the central bank.
-- BERNAMA