KUALA LUMPUR (Aug 16): Sultan of Perak, Sultan Nazrin Muizzuddin Shah, has mooted the idea of creating an Asean institution of Islamic finance to facilitate inward foreign investment to finance infrastructure and similar projects in the region.

Speaking at the opening ceremony of the 17th Kuala Lumpur Islamic Finance Forum (KLIFF) on Tuesday (Aug 16), His Highness said that such creation would help stimulate trade and boost employment, which is necessary, given large populations of many Asean nations.

“Global economic activity continues to shift eastwards. We have seen the continued growth and expansion of consumer markets in the region, the formation of extensive trade networks and the creation of an increasingly business-friendly environment in the region.

“The Islamic finance sector can both participate in and promote further growth across Asean through its role in galvanising investment with a focus on social value creation,” he said.

Meanwhile, His Highness also highlighted that accelerated adoption of fintech applications has been one of the unexpected consequences of the Covid-19 pandemic. He shared that Islamic fintech transactions are expected to reach US$125 billion by 2025, up from US$49 billion in 2020.

The robust growth of 21%-a-year will be driven by the provision of financial services to currently unbanked and underserved populations and sectors, including small and medium enterprises (SMEs), and micro businesses, His Highness said.

“Fintech will also be used to develop innovative solutions, including the halal economy and in-value chain financing.

“By enabling issuers, investors and intermediaries to access existing and new markets in a more efficient and cost-effective manner, they serve to accelerate growth,” Sultan Nazrin said.

Renowned Malaysian shariah scholar Tan Sri Dr Mohd Daud Bakar, in his welcoming address said that Islamic finance has gone through many phases in the last five decades.

“Islamic finance started with a humble beginning, concentrating on local Islamic finance players before it moved on to attract the Western-based financial institutions to join the bandwagon.

“As we speak, Islamic finance has now become a natural target [for] new financial technology-based companies and operators worldwide.

“This is an area where Islamic finance stakeholders — generally speaking — are still perplexed, not knowing what to do and how to do things in order to catch up with many recent developments. It is now or never,” Daud Bakar stressed.

KLIFF — an annual event — consists of discussion and deliberation on a number of themes and issues in order to smoothen and facilitate the whole grand design of Islamic finance, to create a resilient, efficient, sustainable and inclusive world for everyone to live and work happily and purposefully.