Eastern Promise

How do you envision the Islamic world driving the global economy in the years to come?

According to recent reports, the world’s Islamic economy grew at almost double the global rate in 2014 and 2015, and Islamic consumption is set to reach USD2.6 trillion in 2020. Taking ASEAN as a whole, GDP growth was robust at 4.5% in 2015. In fact, despite the prevailing global uncertainty, it is even expected to grow marginally higher in 2016. The European scenario is rather different than that of ASEAN and the global Islamic economy and there are several reasons for this. Firstly, the pace of recovery in Europe since 2008 has been sluggish and eurozone GDP is still below its pre-crisis rate. In contrast, ASEAN’s economic growth has been rapid and stable since 2000, recording a combined GDP of USD2.6 trillion in 2016, making it collectively the seventh-largest economy in the world. The region has become a major global hub for manufacturing and trade, and it is also one of the fastest-growing consumer markets in the world. Also, more Muslims are becoming increasingly active as investors, manufacturers, bankers, traders, competitors, and suppliers. Islamic consumer spending is also rising as demand increases for ethical finance, investment, insurance services, halal food, modest fashion, and halal tourism. Even non-Muslims are attracted to the Islamic economy’s underlying socially conscious ethos. There is an opening here for dialog with the West, which has longed in some sectors for a just and compassionate economy of its own.

What are the challenges that the Muslim world faces, and could these be addressed in a collaborative way?

The Muslim world has some serious issues to address. Education, poverty, and female participation in the workforce remain challenges and only 2% of GDP is spent on R&D. All of this is despite the fact that collectively the Muslim world holds 70% of the world’s energy resources and 40% of global natural resources. We also face the scourge of ISIS, the terrorists who blaspheme our religion by falsely claiming the mantle of an Islamic state. There is nothing Islamic about a group that practices such barbarities, and it is crucial that Muslim majority countries take the lead in condemning them. Malaysia stands firmly against ISIS and its accomplices both at home and abroad. While we acknowledge the issues we must address, we believe it is good to focus on vital topics relating to sukuk infrastructure development, halal industries, female empowerment, and disruptive technology. We must encourage more merit-based economic opportunities in the Muslim world. We seek a world that includes all our citizens and shares the proceeds of growth with all. One that educates all our children; one that supports all our entrepreneurs and SMEs; one that prizes knowledge and innovation, and one that appreciates that our diversity is also our joy and our strength.

Together with the Middle East, Malaysia has become a vital growth center for Islamic finance. Why has this gained so much momentum in recent years?

Increasing numbers of people are recognizing that Islamic finance can be a model of a socially responsible and sustainable investment, and a more secure way of supporting the world’s financial system. Malaysia’s USD418 billion Islamic capital market has more than tripled in size over the last 10 years, and it is strengthening its status as a premier destination for sharia-compliant businesses and transactions. Malaysia continues to be the global leader of the sukuk market, combining 54.3% of the global sukuk outstanding at the end of 2015, while total assets under management of our Islamic fund management industry remains the world’s second largest. Moving forward, we have identified Islamic wealth management as a new growth area, and we look forward to opportunities to collaborate with other jurisdictions, as well as industry and academia, to expand international connectivity, strengthen talent capabilities, and grow the international Islamic capital markets for the benefit of all.