Adnan Zaylani Mohamad Zahid: Advancing roles of Islamic finance to support Asia's recovery

Welcoming remarks by Mr Adnan Zaylani Mohamad Zahid, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the IFN Asia Forum 2021 "Advancing roles of Islamic finance to support Asia's recovery", Kuala Lumpur, 6 December 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
07 December 2021

Sustainability, technology, and innovation. These, among others will be the key themes, together with the evolving and new consumption trends that could drive an estimated USD10 trillion worth of investment opportunities in Asia. Asia should be the next key epicentre of global consumption and trade. Within this are the growing Muslim population and thriving Islamic finance markets, boasting a gargantuan asset size of USD842 billion in 2020. This exciting landscape offers enormous prospects for value creation for the Islamic finance sector.

In the last two years, Islamic financial institutions and their conventional counterparts have played a key role in extending various forms of assistance to help their customers weather the effects of the Covid-19 pandemic. In Malaysia at least, the support includes automatic moratorium with non-compounding interest and profits, targeted repayment assistance, as well as restructuring and rescheduling of facilities. Takaful operators offered policyholders deferment of their contribution without affecting their protection coverage. Alternative finance solutions have also emerged and grown to alleviate the government's fiscal burden in rejuvenating the economy. Digitalisation has enabled the proliferation of alternative finance, particularly platform-based fundraising models such as equity crowdfunding (ECF) and peer-to-peer financing (P2P). These two segments collectively raised RM631 mil last year, exhibiting a growth of 43% from 2019. Combined with traditional forms of financing where financial institutions and capital markets continue to serve the economy, we stand poised for a sustained economic recovery, notwithstanding new variants and the continued challenges in dealing with the pandemic.