PETALING JAYA: Islamic finance has emerged as a significant driver of both national and regional development.
Bank Negara Malaysia (BNM), in its 2025 annual report, noted that Islamic financial assets in the region have more than doubled from US$468bil in 2014 to US$954bil in 2024, with largely non-Muslim countries such as Singapore and the Philippines also experiencing notable growth.
Building on its strong domestic foundation, Malaysia has emerged as a regional leader in Islamic finance, expanding services, fostering innovation, and supporting cross-border growth.
For example, the report said that as of 2025, nine participants from Asean took part in Malaysia’s commodity trading platform, Bursa Suq Al-Sila’, with a combined transaction value of RM55.9bil for the year.
It also noted that in both the Malaysia and Indonesia, sukuk have been widely used to fund the development of various infrastructure projects, including roads, healthcare facilities, and green initiatives.
“More recently, Islamic finance has increasingly been channelled toward green and transition-related activities. Indonesia and Malaysia collectively contributed 45% share of the global sustainable and responsible investment 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,” BNM said.
The central bank noted that Malaysian players have actively expanded across the region, capturing 82% of Asean’s Islamic banking assets as of September 2025, while commanding a 91% share in the takaful and retakaful segments.
In the sukuk segment, the country accounts for about 75% of total outstanding sukuk in Asean. These figures exclude Malaysian players’ Islamic operations abroad.
Beyond financing, Islamic finance also plays an important role in promoting inclusive wealth distribution through instruments such as zakat, waqf and sadaqah.
In Indonesia, for instance, innovative instruments like cash waqf-linked sukuk and deposits enable individuals to channel funds into social, humanitarian, and public projects.
Malaysia, meanwhile, has actively leveraged a blended financing initiative known as iTekad to support entrepreneurial activities by combining bank’s financing with zakat‑based seed capital, further reinforced by capacity‑building programmes and skills training.
“As these communities expand their income‑generating activities, they evolve from recipients to economic contributors who help uplift others.
“As a result, this creates pathways for more inclusive and sustainable growth within the economy,” the central bank explained.
