International test for Malaysia’s Islamic ambition
Euromoney, is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

International test for Malaysia’s Islamic ambition

The country has the potential to cement its position as the world’s leading centre for Islamic finance, but a lack of standardization is causing problems, particularly for international expansion.

Malaysia has established itself as one of the world’s leading centresfor Islamic finance. With growth in the sector now outstripping that of conventional finance, Malaysia could be on the brink of establishing its pre-eminence.

Cheah King Yoong, a Kuala Lumpur-based vice-president of equity research at Alliance Research, says Islamic banking in Malaysia registered a compound growth rate of 23% between 2008 and 2011, far exceeding the 11.4% growth rate of total loans in the Malaysian banking system. In the first seven months of 2011, Malaysia’s Islamic banking assets rose by 15% to reach M$389 billion  ($126 billion).

In the bond market, two-thirds of global outstanding sukuk issuance, $165 billion, has been issued in Malaysia. As a result, many experts are lauding Malaysia as the global hub of Shariah-compliant financing.

Rani Bin Lebai Jaafar, managing director and CEO of RHB Islamic Bank in Malaysia
Rani Bin Lebai Jaafar, managing director and CEO of RHB Islamic Bank in Malaysia

And its burgeoning popularity is not based solely on religion. "People choose Islamic banking for various reasons – for ethical, religious or commercial reasons," says Rani Bin Lebai Jaafar, managing director and CEO of RHB Islamic Bank in Malaysia.

Gift this article