KUALA LUMPUR: Malaysia has retained its position as the world's most developed Islamic finance market in the 2026 Islamic Finance Development Indicator (IFDI) report for the 14th consecutive year, amid nine per cent growth in the global Islamic finance market to US$6.5 trillion (US$1 = RM4.07).
Bank Negara Malaysia Governor Datuk Seri Abdul Rasheed Ghaffour said the achievement reflects four decades of sustained efforts in building a comprehensive and progressive Islamic financial ecosystem.
"As we move forward, Bank Negara Malaysia remains committed to continuing to work with the industry and our partners to advance innovation with purpose and ensure Islamic finance continues to deliver meaningful impact to the economy and society,” he told Bernama when asked to comment on the report.
The report, titled ‘Growth Amid Headwinds’, placed Malaysia first among 140 countries assessed using 2025 data, with an overall IFDI score of 136, compared with 113 for Saudi Arabia and 95 for the United Arab Emirates (UAE).
Indonesia and Pakistan completed the top five with scores of 80 and 74, respectively, reinforcing Malaysia's leadership in an increasingly competitive global Islamic finance landscape.
Malaysia, Saudi Arabia, the UAE, Indonesia and Pakistan retained their positions as the world’s most developed Islamic finance markets. These countries continue to benefit from comprehensive regulatory frameworks, strong institutional development, active financial markets and well-established knowledge ecosystems.
Outside the top five, several countries recorded notable gains, including Türkiye, Tanzania, Kenya, Benin, Azerbaijan and Uzbekistan, reflecting the increasing dynamism of both established and emerging markets, said the report by the London Stock Exchange Group and the Islamic Corporation for the Development of the Private Sector.
Malaysia's strong performance was underpinned by its comprehensive financial ecosystem, established regulatory frameworks and leadership in sustainable Islamic finance, said the report.
The country recorded scores of 150 for financial performance, 98 for governance and 156 for sustainability, placing it first globally in all three categories. It also achieved the maximum score of 200 for awareness and ranked second in knowledge development with a score of 87.
In terms of market size, Malaysia remained the world's third-largest Islamic finance market, with total assets valued at US$862 billion in 2025, behind Iran's US$2.19 trillion and Saudi Arabia's US$1.47 trillion.
The report highlighted Malaysia's plans to further strengthen the sector under the 13th Malaysia Plan (2026-2030), including enhancing cross-border financial connectivity, advancing environmental, social and governance (ESG)-linked Islamic finance and accelerating digitalisation.
Malaysia also maintained a significant position in the global sukuk market, with US$359 billion in outstanding sukuk at the end of 2025, narrowly behind Saudi Arabia's US$369 billion.
The report noted Malaysia's progress in digital Islamic finance, including the issuance of the country's first tokenised sukuk by Khazanah Nasional Bhd in collaboration with the Securities Commission Malaysia in May 2026, which raised RM100 million
In August, CIMB Group
also completed a pilot involving a RM1.68 billion wakala sukuk, comprising RM1.38 billion in tokenised sukuk and RM300 million in conventional-format sukuk, demonstrating the country's efforts to modernise Islamic capital market infrastructure.
Globally, the nine per cent growth in Islamic finance assets was supported by growth in Islamic banking, sukuk, takaful and Islamic investment funds.
Islamic banking remained the largest segment, accounting for approximately 71 per cent of industry assets, while the overall industry is projected to exceed US$10.5 trillion by 2030. - Bernama
