KUALA LUMPUR: Islamic finance holds substantial potential to revitalise the economy through three core principles-Maqasid Shariah, innovation, and global integration, said Bank Negara Malaysia (BNM). BNM Governor Datuk Seri Abdul Rasheed Ghaffour outlined these principles as embedding Maqasid Shariah in economic and sustainable reforms, advancing innovation for value-based solutions, and enhancing global integration for mutual development and shared prosperity.
According to BERNAMA News Agency, Abdul Rasheed commended the Malaysian Islamic finance industry for its proactive approach to Value-based Intermediation (VBI) initiated over half a decade ago. He stressed the importance of concerted efforts and holistic alignment across all key stakeholders for stronger VBI implementation, noting that shareholder stewardship is crucial to ensuring the transformative impacts of value-based finance.
In his address at the 19th Kuala Lumpur Islamic Finance Forum 2024 (KLIFF 2024), he highlighted the forum’s role as a pl
atform for debate and solutions, aiming to enhance branding appeal and reach out to Islamic finance leaders in the Asia-Pacific region. KLIFF 2024 includes key events like the 19th KLIFF Main Forum and the 17th KLIFF Shariah Forum.
Abdul Rasheed urged the industry to explore a full range of Shariah contracts and instruments to drive financial innovation and address real-world challenges. He noted the significant potential of blended finance to expand access for underserved segments by leveraging social finance capital, such as zakat and waqf, alongside traditional financing.
Furthermore, the prospects of technology and digitalisation continue to grow, and BNM will support financial innovation with an activity-based approach and proportional regulation. The issuance of the Broader Application of Ta’awun Exposure Draft and the upcoming Shariah Contracts Framework Consultation Paper are seen as opportunities for the industry to maximise the diverse applications of Shariah contracts.
Regarding Budget 2025, Abd
ul Rasheed pointed out the RM100 million allocation in matching funds for risk-sharing structures, indicating the government’s strong commitment to fostering financial innovation. He called on the industry to innovate through risk-sharing product offerings, especially to fund climate transition and food security initiatives.
Malaysia’s ASEAN Chairmanship will focus on regional collaboration to support the sustainability agenda of ASEAN countries, presenting opportunities to integrate Islamic finance with climate change and transition finance initiatives. Abdul Rasheed also noted the rapid expansion of the global Islamic finance market, which is attracting international investors and driving economic growth in regions like the Philippines, Central Asia, and North Asia.
Finally, he encouraged Islamic finance players to expand their global outreach and cross-border investments by capitalising on these opportunities.