The Islamic Financial Market Subcommittee (IFMC) convened a high-level roundtable bringing together leaders from across the Islamic banking and investment sectors to discuss new initiatives aimed at strengthening Malaysia’s position as a global Islamic finance hub.
Held in conjunction with the Global Islamic Finance Forum (GIFF) 2025, the roundtable culminated in the signing of several landmark agreements — including the Sale and Buy Back Agreement (SBBA) and Tahawwut Master Agreement (TMA) — marking a significant milestone in advancing Malaysia’s Islamic financial market infrastructure.
The event focused on three key areas of reform and innovation:
Broadening the Sukuk and Investor Ecosystem
Industry players discussed strategies to expand the sukuk investor base beyond traditional segments by increasing the visibility of Malaysian Government Investment Issues (MGII) and attracting greater foreign investor participation.
Among the proposals raised were the issuance of MGII under the Wakalah bi al-Khadamat structure to accommodate diverse Shariah interpretations and investor preferences, as well as pricing corporate sukuk over MGII rather than Malaysian Government Securities (MGS). The industry also suggested listing government-guaranteed corporate sukuk on the Fully Automated System for Issuing/Tendering (FAST) to enhance transparency in the bidding process.
Building a Future-Oriented Market Infrastructure
The roundtable highlighted the mandatory transition to the Malaysia Islamic Overnight Rate (MYOR-i) by 1 July 2027 as a bold step toward developing a more comprehensive Islamic financial market. The move will be supported by a detailed transition roadmap from BNM, expected within the quarter.
Participants also emphasised the need for product innovation, system readiness, and greater interbank participation, alongside efforts to remove barriers to Islamic hedging tools to improve market resilience and risk management.
Deepening Market Liquidity through Islamic Repo Instruments
Delegates underscored the importance of advancing Islamic repurchase (repo) instruments and strengthening the role of the Islamic Interbank Money Market (IIMM) in facilitating short-term funding and liquidity management.
BNM Deputy Governor Datuk Adnan Zaylani Mohamad Zahid urged continued innovation within the Islamic finance sector, noting emerging opportunities in Sustainable and Responsible Investment (SRI) finance, waqf-based instruments, and asset tokenisation.
“It is not the intent of Islamic finance to replace debt-based instruments but to expand offerings that include risk-sharing and blended finance, which can drive growth in new sectors,” he said.
In conjunction with the roundtable, the industry signed the Memorandum of Understanding on the Enhanced SBBA and the Memorandum of Understanding on the Tahawwut Master Agreement (TMA). A second Cross-Currency ESG SBBA agreement was also executed between RHB Bank Berhad, HSBC Amanah, Standard Chartered Saadiq, and UOB Malaysia Berhad.
