LABUAN: The post-pandemic environment saw an acceleration in Islamic finance growth, said Labuan Financial Services Authority director-general Nik Mohamed Din Nik Musa.
He said Islamic finance assets saw double-digit growth to US$3.4 trillion in 2020 and are projected to rise to almost US$5 trillion by 2025.
"Islamic fintech or the digital delivery of Islamic finance is on the rise… while the global Muslim population continues to be one of the most significant drivers of growth in Islamic finance, there has also been an emergence of the millennial generation of socially-conscious investors," he said in his speech on 'Evolving and Impacting the Post-Pandemic World: Future Development in Financial Sector' on the second day of the 24th Malaysian Finance Association International Conference 2022 at Dorsett Grand Hotel here today.
He said that unlike profit-oriented conventional investors, this group seeks to invest in more responsible and moral finance solutions with reasonable returns.
"With the pandemic and associated economic dislocation, heightened social unrest and continued climate change, the need for action on environmental, social and governance or ESG by governments and corporations alike has never been higher," he said.
Nik Mohamed Din said as the demand for sustainable investment is on the rise driven by the ESG-related agenda, the trend of investing in sustainable, environmentally friendly and socially conscious businesses is also making Islamic products becoming more appealing to non-Muslim investors.
"In recent years, the Islamic finance industry has witnessed the launch of several initiatives and the creation of innovative structures that were sustainability and ESG-motivated.
"Based on statistics from Refinitiv, ESG Islamic bonds or sukuk issuances reached a record value of over US$5.3 billion in 2021, boosted by large sustainable issuances during the year," he added.
He said that of late, market liberalisations promoting free cross-border trading and business transactions have begun to pick up momentum.
"Noteworthy to mention is the Regional Comprehensive Economic Partnership (RCEP) which is expected to further improve market access and promote greater financial inclusivity in Asia.
"In addition, it will leverage on its geographical location and ride on the vigorous development of bilateral trade and investment as well as cross-border business between Malaysia and the rest of the world," Nik Mohamed Din said.
He said on this front, the Labuan IBFC is inextricably linked with the broader Malaysian financial system, and it remains an important complementary market for Malaysia's economy.
"The centre aspires to be the window for economic connectivity between Malaysia and intra-Asian economies, tapping on the Free Trade Agreements (FTAs) which Malaysia participates in, particularly the RCEP agreement which has just come into force for Malaysia on March 18, 2022," he said. - Bernama