Kuala lumpur: Bank Negara Malaysia (BNM) will adopt the Malaysian Islamic Overnight Rate (MYOR-i) as the mandatory reference rate for all Islamic financial products beginning July 1, 2027, marking a major structural reform in the country’s Islamic finance landscape. Governor Datuk Seri Abdul Rasheed Ghaffour said MYOR-i, the world’s first transaction-based Islamic benchmark rate, would bring transparency, consistency and shariah alignment to the heart of Islamic finance.
According to BERNAMA News Agency, Abdul Rasheed stated that the move forms part of five key developments that Malaysia is pursuing to advance its Islamic financial ecosystem. These initiatives aim at enhancing risk-sharing structures, promoting inclusive development, deepening global connectivity, and building talent. He emphasized that the introduction of MYOR-i is not merely a technical adjustment but a structural transformation, as stated in his opening address at the Global Islamic Finance Forum (GIFF) 2025, launched by Prime Minister Datuk Seri Anwar Ibrahim.
The first initiative encourages impactful re-engineering of finance by expanding the use of risk-sharing structures such as musharakah and mudarabah. This approach offers distinct risk-reward propositions beyond transactional debt. Abdul Rasheed mentioned the roll-out of i-CITA last month, supported by a RM100 million fund from the government, to encourage risk-sharing innovation for viable projects that bring tangible benefits to Malaysia. Additionally, there is an active review of shariah contracts and investment account policies to create a conducive regulatory environment for investment intermediation.
The second initiative focuses on redefining inclusive growth by integrating Islamic social finance with mainstream financial systems. Abdul Rasheed cited the iTEKAD programme, powered by blended finance, as a successful example of how Islamic finance can uplift communities by increasing employment and skills. The programme’s expansion for financial protection, supported by a RM5 million government matching grant for takaful contributions, highlights the collaboration between banks, takaful operators, and development partners.
Meanwhile, the Governor urged Malaysia’s Islamic finance to transition from selected success to systemic transformation, noting the readiness of tools and partnerships to accelerate this shift. The third initiative is Malaysia’s effort to position Islamic finance at the forefront of two global growth frontiers – the halal economy and sustainable finance, which are trillion-dollar opportunities waiting to be unlocked.
Through the Malaysia International Islamic Financial Centre (MIFC) Leadership Council, strategic groundwork for global connectivity has been laid. Abdul Rasheed emphasized the need for stronger industry execution and supported the formation of the MIFC Business Network (MBN) as the next phase of MIFC Leadership Council transition. Nine industry players from banking, takaful, capital markets, and ancillary services have committed as founding members of MBN, with invitations for wider participation to be announced soon.
The fifth frontier involves strengthening the talent pipeline and innovation ecosystem. Institutions like INCEIF University are evolving into engines of innovation, embedding the Maqasid Shariah into economic and policy frameworks. Regionally, IBFIM is scaling up capacity through the enhanced Associate Qualification in Islamic Finance (AQIF), tailored for ASEAN markets including Brunei, Indonesia, the Philippines, and Singapore.
Abdul Rasheed highlighted that the global Islamic finance industry is projected to surpass US$9.7 trillion by 2029. He stressed that the journey cannot be defined by scale alone but must be underpinned by substance, leadership, and innovation with purpose.