by AUFA MARDHIAH / pic AUFA MARDHIAH

THE presence of 47 Islamic financial technology (fintech) is a sure sign that Malaysia is fast becoming a major centre for Islamic fintech.

Another sure sign is the growth in Islamic fintech transactions which are expected to reach US$128 billion (RM572.16 billion) by 2025, up from US$49 billion in 2020.

“Accelerated adoption of fintech applications has been one of the unexpected consequences of Covid-19 pandemic.

“The sector leverages technological advances to provide alternative and affordable financial solutions that help to bridge the financial inclusion gap,” Sultan of Perak, Sultan Nazrin Muizzuddin Shah (picture), told an Islamic finance forum in Kuala Lumpur (KL) today.

He said there are 41 Islamic fintech companies in Indonesia, 29 in the United Arab Emirates and 25 in Saudi Arabia.

The Perak ruler said the “robust growth” for Islamic fintech transactions will be driven by the provision of financial services to currently unbanked and underserved populations and sectors, including micro, small and medium enterprises.

“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 when opening the 17th KL Islamic Finance Forum 2022.

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.

Sultan Nazrin has also mooted the idea of 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 to boost employment, something that is very necessary given the large populations of many Asean nations,” he said.

Malaysia’s capital market, including the Islamic capital market, is estimated to be worth US$500 billion by June 2022. Shariah-compliant securities currently account for nearly 80% of the listings on the local bourse Bursa Malaysia.

Malaysia continues to lead the sukuk market internationally, with almost 40% of the world’s outstanding sukuk in June 2022 and nearly 30% of all sukuk issuances globally.

For Islamic funds, Malaysia remains the top three countries worldwide, with over 22% of total assets under management globally as of end 2021.