Malaysia continues to paved the way within the Islamic economy and finance, leading for the eighth consecutive yr based on rating by the Global Islamic Economy Indicator (GIEI). The emerging Islamic FinTech sectors and economies proceed to flourish because of government support and the Malaysian Digital Economy Corporation’s (MDEC) continued push to expand the digitization of the economy and aggressively create a supportive ecosystem on which it will probably thrive.
Over the years, the Malaysian government has identified Islamic Finance and the Islamic Digital Economy as Key Economic Growth Activities (KEGA) to realize and maintain its position as a worldwide Islamic FinTech hub. Malaysia is the most important issuer of Sukuk on this planet and in addition has probably the greatest Halal standards on this planet.
“These global accolades pave the best way for Malaysia to proceed to guide as a worldwide Islamic FinTech hub and turn out to be the center of digital ASEAN. Thanks to our strong digital economy ecosystem in member countries of the Organization of Islamic Cooperation (OIC), now we have a comparative advantage over others in providing Shariah-compliant Islamic financial and FinTech services globally.
“We are extremely proud of our leadership position and MDEC will continue to work with financial regulators and industry partners in all relevant areas to continue to expand our capabilities, facilities and capacity to ensure we maintain our position as a global leader,” said Gopi Ganesalingam, MDEC Vice President Digitally Driven Enterprises section.
Muslims are expected to spend $2.4 trillion by 2024, up from $2.2 trillion in 2018, in accordance with the State of the Global Islamic Economy Report (GIER) 2020/21. GIEI also revealed that 66% of consumers are willing to pay more for ethical products, and a Thomson Reuters report predicts that Shariah-compliant assets worldwide will reach $3.8 trillion by 2022. In addition to the recently signed Regional Comprehensive Economic Partnership (RCEP) agreement, which created the world’s largest trading bloc, Malaysia is poised to capture 30 percent of the world’s population.
A brand new economic frontier has opened up for Malaysia.
“To continue to drive the growth of the Islamic digital economy, collaborative effort and commitment from various parties will be crucial in identifying opportunities, issues and challenges. Effective collaboration will improve innovation. The key to achieving inclusive financial growth is to make a determined effort to implement Fourth Industrial Revolution (4IR) technologies such as Islamic FinTech to ensure fair and equitable distribution among income groups and shared prosperity for all in line with the recently announced Malaysian Digital Economy Blueprint (MyDIGITAL ) and Malaysia 5.0,” said Datuk Wira Dr. Hj. Hussin Mohamed Ariff, Chairman of MDEC.
Malaysia’s excellent fundraising track record bodes well overall, with the Securities Commission reporting a 130 per cent increase in comparison with 2018, with 1,449 SMEs participating, 18,700 investors (up 91 per cent) and 5,612 campaigns launched (up 131 percent). The Islamic capital market grew by eight percent to RM2 trillion, outperforming the general capital market growth of three percent.
Malaysia also offers a great platform for Islamic FinTech corporations to introduce product offerings before entering other Muslim-majority countries. Bank Negara Malaysia, BNM (Central Bank of Malaysia) and the Securities Commission have enabled FinTech innovations to make such expansion widespread.
The Government of Malaysia through MDEC has implemented various measures and initiatives. In collaboration with regulators, agencies, corporations, financial institutions, accelerators and other relevant bodies, MDEC continues to develop and implement plans and programs to capture these recent economic opportunities.
One such initiative is Digital Financial Inclusion, which goals to extend the knowledge of B40 countries (lowest 40 percent of individuals) and micro SMEs about financial services. The collaboration program, implemented in partnership with 11 FinTech corporations, attracted 2,300 users across three predominant product offerings, mainly microfinance, microinvestment and microinsurance.
And FinTech Booster, in partnership with BNM, is MDEC’s performance enhancement program designed to assist FinTech corporations, each local and international, develop their services and products through three strategic modules; Law and compliance, business model and technology. Since launch, six public workshops and nineteen private workshops have been held, and as of March 2021, over 400 people have registered on the web site, from each local and foreign corporations.
The second pillar, which will probably be launched this yr, will give attention to market access and business opportunities for FinTech, and the third on technological integration.
Malaysia has all of the foundations and ecosystem to make it a worldwide Islamic FinTech hub, which incorporates a mature Islamic financial environment and a conducive and profitable business environment. It can also be blessed with talent starting from world-renowned scientists, Shariah researchers to experts in Islamic finance, in addition to a continuous inflow of local and international talent in the sector of FinTech and Islamic finance. All these aspects bode well for it maintaining its position in Wave 2.0 of Islamic finance. Malaysia is prepared and waiting.
This article was produced and sponsored by MDEC. It was first published within the Global Islamic Fintech Report 2021 by DinarStandard and Elipses. There could also be a report downloaded from here.
