The global Islamic finance market would reach $4.9 trillion by 2025, said Yazrin Syakhairi, Malaysian Trade Commissioner, under the Trade Section of the Consulate General of Malaysia in Hong Kong.
Speaking on the sidelines of the Asian Financial Forum (AFF) in Hong Kong, Syakhairi told the Emirates News Agency (WAM) that the Islamic finance market is witnessing significant and rapid growth worldwide, surpassing $2.2trn in 2022.
It is expected that the Islamic finance sector will grow by around 10 per cent globally in 2023 and 2024, according to earlier estimates by Standard Poors Global Ratings.
Syakhairi explained that the AFF is the largest financial event currently taking place, associated with the financial services industry, which is one of the largest industries in Hong Kong, one of the world’s major financial cities.
He noted that Malaysia is participating in the event to share its expertise in finance, particularly in Islamic finance.
He mentioned that the forum is a good opportunity to highlight other financing tools such as sukuk or Islamic bonds, in addition to the prevailing global trend towards green finance, which can then be listed on financial markets in Hong Kong, Dubai and Kuala Lumpur.
In response to a question about co-operation between the UAE and Malaysia in the financial sector, the Malaysian Trade Commissioner stated that the two countries have close and robust trade relations. He expressed hope for more collaboration and new initiatives with the UAE to increase and strengthen co-operation in the future.
Syakhairi added that the UAE is witnessing significant development in the Islamic finance industry. He clarified that recent statistics indicate a noticeable growth in the size of this industry in the Middle East and the Association of Southeast Asian Nations, as well as its growth in other parts of the world.
A reversal in globalisation and challenges faced by Western financial system are presenting fresh opportunities for Islamic finance to gain a stronger foothold and influence among consumers and investors in Asia-Pacific, an industry expert said.
Hong Kong is well-positioned to leverage its status as a global financial hub to establish connections with industry powerhouses in Southeast Asia and the Middle Eastern countries, according to Azman Mokhtar, chairman of the leadership council at Malaysia International Islamic Finance Centre.
“As the world is de-globalising, there are shifting sands, and new trade and investment routes are being placed in many ways,” he said at the Asian Financial Forum. Hong Kong can collaborate with market leaders like Malaysia, Indonesia and Saudi Arabia to broaden or deepen its services, he added.
Azman served as the managing director of Khazanah Nasional, Malaysia’s sovereign wealth fund, between June 2004 and July 2018. The fund had $25.9 billion of investment assets at the end of 2022.
Islamic finance is a system that operates in accordance with Islamic law and principles, which promote ethical and socially responsible financial practices.
Islamic finance has made significant progress to become a $4.5trn market globally, and is set to grow 11pc annually through 2030, Azman said, citing industry forecasts. Banking and services based on Islamic tenets represent an attractive and fast-growing segment, he added.
“In the next five years, it will double to $9trn to $10trn,” he said, backed by demand from 2bn Muslims, or 24pc of the global population, who contributed nearly 10pc to the global economy.
Hong Kong has raised $3bn from the sale of three dollar denominated Islamic bonds or sukuk, since 2014 with a view to attracting more issuers and investors to participate in the city’s capital market.
The comments followed recent efforts by chief executive John Lee Ka-chiu and financial secretary Paul Chan Mo-po to strengthen Hong Kong’s economic and financial ties with the Middle East, as Beijing strengthened its outreach in the region amid worsening US-China relations.
Azman also noted several firsts in Islamic finance in non-Muslim countries elsewhere. Australia this year will have its inaugural Islamic lender to serve the country’s 813,000 Muslims, while Luxembourg’s central bank became the first among its European peers to join the Islamic Financial Services Board.
The board, based in the Malaysian capital of Kuala Lumpur, is tasked with setting global standards to promote and enhance the stability of the Islamic financial services industry.