Malaysia has been strengthening its presence in the Islamic Digital Economy (IDE), making it a vehicle for economic growth and a source of new revenue. This has been possible due to its growing technology companies that serve the digitalisation of its Islamic Finance, Halal and Lifestyle sectors. Despite the uncertainties brought about by the Covid-19 pandemic, businesses and organisations worldwide have shown incredible resilience, and a pivot towards digital adoption was inevitable. The Malaysian government has recognised the potential for IDE and has leveraged technologies such as artificial intelligence, the internet of things (IoT), Web3, fintech and blockchain, among others, to grow its economy. The Malaysia Digital Economy Corporation (MDEC) has been at the forefront of supporting startups that have fed the burgeoning demand for digitalisation from financial institutions, government agencies, cooperatives, and the private sector. The country’s multicultural, multilingual, digitally skilled talent pool, state-of-the-art infrastructure, robust policies and guidelines, and mature investment ecosystem have contributed towards Malaysia’s number one global ranking in Islamic Finance and Islamic Fintech.
The fintech ecosystem has expanded exponentially over the years, and Malaysia has 294 fintech players as of 2021. Moreover, Malaysia is currently ranked first in the overall Global Islamic Economic Indicator ranking with respect to Islamic finance, halal food, Muslim-friendly travel, and media and recreation, according to the World Bank Group. The Halal economy is dominated by the food services sector, with revenue forecast to reach $47.6bn by 2025 from $31bn in 2021. One of the companies driving the IDE agenda forward in Malaysia is Sinisana, a traceability solutions provider from Sarawak, a state in East Malaysia, which caters to companies that intend to allay consumer fears about the Halal nature of the beef they purchase, among others. To further bolster Islamic finance in the development of Malaysia’s Halal economy, it is essential to support the adoption of digital payments, integrate Halal advisory and marketplaces, and improve current offerings through innovative solutions such as fintech, blended finance, alternative finance and Islamic finance.