KUALA LUMPUR: Islamic finance has truly become a mainstream force, driven by rising interest in sukuk, halal investments and Islamic fintech, according to the Securities Commission Malaysia (SC).
Its executive director of the Islamic Capital Market (ICM) Sharifatul Hanizah Said Ali said this trend is supported by stable search patterns over the years.
Amidst increasing demand, she highlighted that the Islamic finance industry is projected to reach US$6.7 trillion by 2027, up from US$4 trillion in 2022. (US$1 = RM4.13).
This growth will be primarily propelled by key asset classes, with sukuk expected to rise to US$1.3 trillion from US$788 billion in 2022.
Additionally, assets managed by Islamic finance institutions are forecasted to increase from US$167 billion to US$200 billion.
In Malaysia, the ICM has reached RM2.6 trillion as of July 2024, reflecting a year-on-year growth of 10 per cent, alongside the country’s economic growth of 5.9 per cent in the second quarter (2Q 2024).
By sector, the sukuk market stood at RM1.3 trillion in July 2024, with over RM28 billion recognised as sustainable and responsible investment (SRI) sukuk.
"It is noteworthy to highlight that the SRI sukuk segment started from just RM100 million over a decade ago in one sector (education, through sukuk Ihsan by Khazanah) and has since expanded to include areas such as energy and utilities, which now make up close to 46 per cent, followed by transportation and real estate," Sharifatul said in her keynote address at IFN Investor Asia 2024 theme: "Building a Resilient and Innovative ICM for Global Impact” today.
Sharifatul further noted that Malaysia continues to lead the global Sukuk market, contributing more than one-third of the total market share in outstanding global Sukuk.
She also pointed out the robustness of the shariah-compliant equity market, which stands at RM1.3 trillion in market capitalisation, representing almost 80 per cent of listed stocks across Bursa Malaysia’s Main, ACE, and Leap markets.
"The Islamic fund management ecosystem places Malaysia among the top three in the world, with assets under management (AUM) of US$32 billion as of 2022.
"It comprises shariah-compliant funds, consisting of private mandates and collective investment schemes, including listed products like real estate investment trusts and exchange-traded funds, and unlisted investment products like unit trust funds, wholesale funds and private retirement schemes,” she added.
She also mentioned that Malaysia’s Venture Capital and Private Equity market is thriving, reaching RM17.9 billion in committed funds in 2023, spanning both shariah and non-shariah investments.
This reflects sustained interest from corporate and institutional investors.
Currently, Malaysia boasts 12 equity crowdfunding platforms and 13 peer-to-peer platforms offering Islamic solutions.
In 2023, funds raised through these platforms surged more than fourfold, reaching RM524.8 billion, up from RM140.8 billion in 2022.
"Several initiatives over the past decade underpin Malaysia's leadership in the ICM and sustainable finance ecosystem, supported by ongoing enhancements and the development of frameworks and regulatory guidance.
"These include the pioneering SRI sukuk frameworks, the Waqf-featured fund framework, the Islamic Fund and Wealth Management Blueprint, and the one-view Guidelines on ICM Products and Services,” she added. - Bernama
