Malaysia’s burgeoning Islamic financial ecosystem is poised to draw increased investments from both Islamic nations and ethical investors globally.
Shariah Compliance and Ethical Investing: Key Attractions
Associate Professor Dr. Mohd Zukime Mat Junoh of Universiti Malaysia Perlis (UniMAP) highlighted that Malaysia’s Islamic financial system appeals to investors because of its adherence to Shariah principles, transparency, ethics, and diversified investment opportunities. He informed that investors from Islamic countries are looking for investment options that comply with Shariah principles, and the expanding Islamic finance sector provides a range of products and services to fulfil these requirements.
Global Interest in Islamic Finance
Dr. Mohd Zukime noted that the principles of transparency, fairness, and social responsibility in Islamic finance make it an attractive alternative for global investors, including those from non-Islamic countries, looking to diversify their investments. “Islamic finance emphasizes principles of transparency, fairness, and social responsibility, offering an attractive alternative for global investors — including from non-Islamic countries — seeking to diversify their investments due to its stability and ethical investing,” he added.
Prime Minister’s Vision for Islamic Finance
During the Global Forum on Islamic Economics and Finance (GFIEF) last Tuesday, Prime Minister Datuk Seri Anwar Ibrahim stressed the need for the Islamic finance ecosystem to evolve by focusing on value-based finance and moving beyond profit-driven motives. He emphasized that wealth should be shared to uplift communities and ensure balanced prosperity. Anwar also announced an RM100 million allocation to foster innovation in Islamic finance.
Advancing the Islamic Financial Ecosystem
Dr. Mohd Zukime further explained that the Islamic financial ecosystem, which is based on justice, balance, and social responsibility, must continue to advance to benefit the country’s economy. This would solidify Malaysia’s position as a global Islamic financial hub, attracting more financial institutions and foreign investors and boosting national economic growth.
Stability and Resilience in Islamic Finance
“By eliminating usury and excessive speculation, Islamic finance tends to be more stable and resilient to financial crises. This can help reduce market volatility and create a more stable economic environment,” Dr. Mohd Zukime said.
Ensuring Shariah Objectives and Wealth Distribution
Nur Syaedah Kamis, a lecturer at Perlis Islamic University College’s Faculty of Muamalat and Islamic Finance, emphasized the importance of developing the Islamic financial ecosystem to maintain Shariah objectives, especially wealth protection. She noted that the ecosystem ensures transactions and investments benefit all stakeholders, including the asnaf or those in need, contributing significantly to financial stability, market diversification, and social well-being.
Government Support for Innovation
Nur Syaedah praised the government’s RM100 million allocation to boost innovation in Islamic finance, stating that it encourages experts in the industry and academia to collaborate and support the government’s efforts in developing a robust Islamic financial ecosystem. “This incentive has certainly encouraged Islamic finance experts, both in the industry and academia, to work together and support the government’s efforts in developing the Islamic financial ecosystem,” she said.
Inclusive and Sustainable Economic Development
Strengthening a resilient Islamic financial ecosystem, aligned with technological advancements and societal needs, is crucial for Malaysia’s inclusive and sustainable economic development. Nur Syaedah highlighted that innovations in this sector would benefit the underprivileged and contribute to social well-being and poverty reduction in the country.
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Source: Bernama