Bank Negara Malaysia (BNM) has called on Islamic financial institutions to play a greater role in financing Malaysia’s economic transformation, particularly in advanced manufacturing, technology-intensive industries and the energy transition.
Governor Datuk Seri Abdul Rasheed Ghaffour said Islamic finance must move beyond expanding its market share and focus on directing capital towards productive investments that generate higher incomes, better jobs and sustainable economic growth.
Speaking at the FIDE Forum on Thursday, he noted that Malaysia’s economy has exceeded RM2 trillion, with growth expected to remain around 4% to 5% in 2026.
However, financing for strategic sectors remains relatively modest, with bank lending approvals continuing to be concentrated in services despite the country’s ambitions to develop higher-value industries.
Abdul Rasheed highlighted the significant expansion of Malaysia’s Islamic finance industry over the past decade.
Islamic banking’s share of total financing has nearly doubled from 25% in 2015 to 48%, while the Islamic capital market has expanded from RM420 billion to RM670 billion.
The Islamic capital market’s share has also remained above 60%.
He said the industry must now translate its established market position into financing solutions for emerging sectors that require specialised expertise, longer investment horizons and different risk-sharing arrangements.
This would require stronger capabilities in technology assessment, financing structures, talent development and capital mobilisation.
The governor said BNM is considering Malaysia’s long-term economic and social priorities as it develops the Financial Sector Blueprint 2027–2030.
He urged financial institutions to align their capital allocation with national strategies, including the 13th Malaysia Plan, National Semiconductor Strategy and National Energy Transition Roadmap.
Abdul Rasheed also emphasised that bank boards, management teams and Shariah committees must work together to develop financing solutions that support businesses and the wider economy.
He said the future success of Islamic finance should be measured not only by industry growth and Shariah compliance, but also by its ability to improve livelihoods, strengthen businesses and support Malaysia’s transition towards a more productive and sustainable economy.
