Malaysia is positioning itself to become the global benchmark for Islamic fintech, climate-oriented sukuk, and Islamic ESG regulation and innovation by 2040, Deputy Prime Minister Datuk Seri Fadillah Yusof announced. Speaking at the opening of the 20th Kuala Lumpur Islamic Finance Forum (KLIFF) 2025, he noted that the global financial landscape is rapidly evolving, and Islamic finance is set to lead a new frontier aligned with major global trends.
Fadillah highlighted that Islamic finance will play a central role in shaping Malaysia’s climate strategy. This includes supporting a wide range of transition-focused financial instruments such as green and blue sukuk, as well as financing areas like hydrogen development, renewable energy, water security, and sustainable food systems. He added that Malaysia intends to take the lead in advancing technology-driven Islamic finance through Islamic digital banks, artificial intelligence-enabled Shariah advisory, and blockchain-based sukuk platforms.
Malaysia also plans to modernise social finance by digitising zakat, strengthening productive waqf initiatives, expanding micro-takaful, and enhancing community resilience. Fadillah pointed to Malaysia’s issuance of the world’s first tokenised cash waqf sukuk as evidence of the country’s ability to produce solutions that are compassionate, innovative, and inclusive. He also emphasised Malaysia’s leadership in green finance through the Sustainable and Responsible Investment (SRI) Sukuk and Bond Grant Scheme, which fully covers eligible issuance costs and aligns with the ASEAN Taxonomy.
The deputy prime minister shared that Islamic banking now contributes 46.6 per cent of Malaysia’s total national financing and is expected to surpass 50 per cent, which would make Malaysia the first country where Islamic finance becomes the mainstream financial system. Islamic banking assets have exceeded US$260 billion, while the Islamic capital market stands at RM2.63 trillion, representing 62 per cent of the total market. He added that Malaysia continues to dominate the global sukuk market, accounting for 40 to 50 per cent of worldwide issuances.
With the theme “Strengthening Economies, Advancing Resilience and Sustainability,” KLIFF 2025 brings together more than 400 delegates from around the world to explore the future of Islamic finance. Discussions during the two-day forum will cover regulatory innovation, sustainable finance, and digital Islamic finance, reflecting the government’s commitment to strengthening Malaysia’s position as a global leader in the Islamic finance industry.