Special Address at The Opening Ceremony Of 17th Kuala Lumpur Islamic Finance Forum (KlIFF) 2022
16 August 2022  |   By His Royal Highness Sultan Nazrin Muizzuddin Shah

Keynote Address
His Royal Highness
Sultan Nazrin Muizzuddin Shah
The Opening Ceremony of 17th Kuala Lumpur Islamic Finance Forum
(KLIFF) 2022

16 August 2022
 Royale Chulan Hotel, Kuala Lumpur


In the name of Allah, the Most Gracious, the Most Merciful.

Assalamualaikum warahmatullahi wabarakatuh.

1. It gives me great pleasure to see you all here in person today, at this, the 17th Kuala Lumpur Islamic Finance Forum. Although some us might have become accustomed to the ‘new norm’ of  post-pandemic virtual conferencing as with our Forum last year I, for one, am glad to be speaking to you face to face today, rather than in front of a screen. I would like to congratulate the organizers for once again putting together an impressive line-up for the Forum. KLIFF adapted brilliantly to an online format during the lockdown period, and I am delighted that it has been able to come through that and return to its normal self.

Ladies and Gentlemen,


In the five decades since its inception, Islamic finance has undergone much growth and change. Initially aimed at assisting Muslims to fulfil their religious obligations, the sector has evolved into a multi-billion-dollar industry. It is now fully part of mainstream financial


Few would have predicted such an evolution from its humble The industry now extends into areas such as digital banking; SRI Sukuk; Islamic FinTech; crowdfunding; ESG investing and sustainable finance. The sector has benefitted greatly from the sustained support of the Malaysian government and regulators, as well as the active participation of stakeholders.


Malaysia has long been recognised as a global leader in Islamic finance. Its progress has continued despite the challenging global financial and economic environment. We must provide the right conditions to ensure its continued growth. We must strive to develop a more comprehensive and resilient Islamic finance One that promotes financial stability and growth through the robustness of its legal and Shariah governance framework; through the dynamism of its interconnected markets; through the strength of its financial infrastructure; and through the responsiveness, sophistication, as well as accessibility of its products and services.


Looking ahead, a key feature of the sector will be its international dimension, as Islamic finance becomes an increasingly important part of the global financial landscape. An industry which remains locked down in the domestic market is unlikely to prosper. This is even more the case for financial products and services. Market expansion beyond Malaysian shores should continue to be prioritized as part of the development of policies and directions for the


The expansion of Islamic finance into different markets reflects broader patterns of global financial and economic These include the continued strengthening of financial and economic linkages between Asian and Middle Eastern countries. We also see the increasing reach of Islamic finance beyond both the traditional Muslim countries and the more established financial centres. For issuers, Islamic finance is increasingly viewed as an attractive alternative for raising capital, while investors are increasingly looking at it as a new asset class for their portfolios.

7. This continued global expansion of Islamic finance has taken place despite the challenging environment of the last decade or so, due to the global financial crisis, and more recently, the pandemic. This demonstrates the resilience of Islamic finance as a stable financial system, something that should inspire others to engage with the
8. The world has suffered greatly over the past two years due to the pandemic. Many countries are still striving to contain the virus, and to address its many adverse impacts - on public health, on livelihoods, on societies and on markets. At the same time, we are all facing other very real concerns about our economies and our The war in Ukraine has only worsened the existing pressures on our globalized system. The confluence of negative trends may well be driving the global economy towards recession.
9. Despite these challenges, our capital market is proving resilient, including the Islamic capital This segment grew by 11 per cent in 2020, up from 8 per cent the previous year. By June 2022, it was worth an estimated USD500 billion. Shariah-compliant securities now account for nearly 80 per cent of the listings on Bursa Malaysia.
10. Malaysia continues to lead the Sukuk market internationally, with about 40 per cent of the world's outstanding Sukuk. In June 2022, it accounted for nearly 30 per cent of all Sukuk issuances globally. In terms of Islamic funds, Malaysia remains among the top three countries worldwide, with over 22 per cent of total assets under management globally, as of end 2021
11. Malaysian banks have also been appointed as the arranger and lead administrator of state-owned Sukuk for other jurisdictions, including Turkiye and Hong Kong. This shows that Malaysia is being recognised internationally as a leader in Islamic finance. The government's plans to promote Islamic finance talent and human capital development in our higher education institutions could help to provide the expertise necessary to elevate the sector further. Thus, Malaysia offers a complete package to become an Islamic finance centre that should be able to maintain and expand its position.
12. Malaysia is also becoming a leading centre for Islamic As of August 2022, 47 Islamic fintech companies were operating in Malaysia, compared to 41 in Indonesia, 29 in the UAE, and 25 in Saudi Arabia. Conventional fintech start-ups have also recently ventured into the Islamic space in Malaysia.
13. Accelerated adoption of fintech applications has been one of the unexpected consequences of the Covid-19 pandemic. The sector leverages technological advances to provide alternative and affordable financial solutions that help to bridge the financial inclusion gap. Islamic fintech transactions are expected to reach USD128 billion by 2025, up from USD49 billion in This robust growth of 21 per cent a year will be driven by the provision of financial services to currently unbanked and under-served populations and sectors, including small and medium enterprises and micro businesses.
14. Fintech will also be used to develop innovative solutions, including in the halal economy and in value-chain financing. Digital solutions greatly facilitate 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. These developments demonstrate the important role that a technology-enabled Islamic capital market can play as a catalyst for economic recovery and inclusive growth.
15. Islamic finance has thus become an important component of the overall Malaysian financial system, contributing to the growth and development of our According to the Islamic Finance Development Report of 2021, Malaysia ranks as the leader among 135 countries, based on Islamic Finance Development Indicators.
16. These developments are the product of our past collective But we must not rest on our laurels. What is required is for us to ensure that existing policy frameworks can accommodate innovation. Where necessary, we should refresh our policy statements and develop new strategies. Other jurisdictions are introducing dynamic and robust policies and strategies, aimed at powering the expansion of Islamic finance within their borders and beyond. We must also continue to innovate, to develop our institutions, and to do all that is necessary to sustain our leading position in this sector.
17. As Islamic finance becomes an increasingly important part of the global financial system, it will also inevitably be affected by the changing landscape of global financial markets. There is currently an urgent need to mobilise greater international cooperation in order to maintain global financial stability. The recent pandemic has shown how cross-border financial integration must be accompanied by international cooperation and coordination. This is necessary to prevent cross-border regulatory arbitrage as well as the risk of contagion effects.

The post-pandemic period will also herald a new chapter in the development phase of Islamic finance. Current trends towards its internationalisation will only intensify. Increased collective efforts are thus also urgently required to ensure that Islamic finance is similarly subject to coherent and high-quality regulation. These regulatory structures must reach across all borders, with the universal application and enforcement of all the required This would contribute to the more successful international integration of Islamic finance.


This enhanced international dimension will be accompanied by a new set of challenges, of course, arising from the fundamentally different operating environment. This will be characterised by more competitive dynamics; by greater uncertainty; and by far greater

20. One idea well worth considering would be the creation of an ASEAN institution of Islamic finance. Its role would be to facilitate inward foreign investment to finance infrastructure and similar projects in the region. These could help to stimulate trade and to boost employment, something that is very necessary given the 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.


One of the most crucial elements of a vibrant and flourishing Islamic finance industry will always remain its Shariah As ever, the Islamic tradition will continue to serve as a driver for innovation, bid’ah hasanah, and creativity in the sector. Efforts must thus be made to ensure that the full potential and wisdom of the Shariah classical tradition is being harnessed.


This underlying ethical dimension of Islamic finance is what ensures the sustainability, as well as the social acceptability, of the entire enterprise. It is achieved through the establishment of strong institutional structures based on good governance and It is also achieved by ensuring that any financial innovation and regulatory improvements are rooted in the spirit of Islamic law, the Maqasid al-Shariah. Thus at their very core, these innovations and improvements all aim to serve the public good.


Importantly, it is the long-held Shariah principles of Islamic finance that enable it to facilitate financial inclusion without the risk of fuelling excesses or imbalances in the wider economy. This is because Shariah-compliant financial transactions must always be supported by an underlying economic activity. In this respect, the Shariah Committee of Islamic Financial Institutions becomes a key international It helps to ensure that the inherent strengths and principles of Islamic finance are fully realised.


Continued close cooperation among Shariah regulators, along with scholars and practitioners - in research and in the development of new products - will provide a strong foundation for a dynamic and future-ready Islamic financial system.


It is notable that the great ulama of the past demonstrated a practical approach in dealing with commercial contracts. This can be seen in their juristic writings as well as their fatwa collections. Multiple views and differing opinions are frequently recorded even on a single substantive matter of the law, showing a true breadth and flexibility of thought. The magnitude of the scope of this juristic scholarship must continue in our times. This will allow the flexibility required for us to govern our modern financial transactions effectively, whilst ensuring that we remain rooted in the Shariah tradition, and guided by the great minds of our jurists and ulama, past and present.

Ladies and Gentlemen,


I am pleased to see topics that bridge both modern and classical concerns have been selected for discussion at this year’s edition of the ‘Dialogue of Shariah Scholars’, or KLIFF Muzakarah. They include interesting questions on the Islamic capital market; fintech in Islamic finance; as well as the latest Shariah rulings on the global stage, with a useful comparison to their conventional legal counterparts.


I trust that KLIFF 2022 will be a catalyst for stimulating new ideas and directions, and for helping to establish Islamic finance firmly in the new post-pandemic landscape. While we may not be able to avoid unexpected crises like the pandemic, we are in a position - InsyaAllah - to address effectively the issues and challenges that emerge from them. In this era of mounting global crises, I strongly believe that events like this international forum can help to provide the direction we need to navigate towards a brighter future.


With that, I wholeheartedly wish everyone a meaningful, enlightening, and impactful event.


In the name of Allah, the Most Gracious, the Most Merciful, Bismillahirrahmanirrahim, I declare the Kuala Lumpur Islamic Finance Forum 2022 officially open.

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