Malaysia's Islamic Finance Pushes Innovation, Targets Over Half of National Assets

Abdul Rasheed Ghaffour explained that Malaysia’s Islamic finance industry has progressed through four phases since the launch of Bank Islam Malaysia Bhd in 1983, moving from foundation-building to mainstreaming, diversification and now value-based finance. Today it accounts for 48 % of the country’s total financial assets, with expectations to pass the 50 % mark soon, and generated RM160 billion in sukuk issuance to fund the real sector in 2025.

Business financing grew 9.7 % and micro-financing for MSMEs rose 13.3 %. Malaysia remains the leading Islamic finance hub in ASEAN, holding about 82 % of regional banking assets and 91 % of takaful business. New programmes like iTEKAD, which now supports roughly 16,000 micro-entrepreneurs and has created over 2,400 jobs, and the Greening Halal Business initiative aim to combine social impact with sustainable, digital-enabled growth for halal SMEs. The governor stressed that future innovation will focus on purpose-driven finance that expands access, improves credit assessment and reduces costs.