KUALA LUMPUR – The Islamic finance industry is poised to record an average annual growth of 5% in the post-COVID-19 era in view of multiple signals of opportunities that are emerging, said Alif Technologies co-founder Dr Farrukh Habib, reported Bernama.
He said among the strong signals of opportunities were the Islamic finance regulations in new countries, banks’ digitisation as well as growth of social finance such as waqf and zakat.
He also pointed out the weak signal of opportunities, which included the tokenisation of sukuks, growth in impact investment/ environmental, social and corporate governance (ESG) funds, and governments supporting the Islamic financial technology (fintech) ecosystem.
“During the pre-COVID era, we have a growth of 13.9% in 2019, which fell to zero in 2019/2020.
“However, moving forward from 2021, we will see a 5% on average growth in the post-COVID era,” he said during the Securities Commission Malaysia’s (SC) eighth annual SCxSC Fintech Conference today.
Farrukh gave a presentation on “Solving Global Challenges Using Islamic Finance” at the virtual event.
He said Islamic finance assets showed strong growth in 2019 but COVID-19 had been a setback for the industry.
According to him, there were 1,462 Islamic financial institutions globally with US$4.93 billion (US$1=RM4.15) Islamic finance investments recorded in 2019/2020.
“It is still a huge industry and can grow exponentially in the post-COVID-19 era,” he said.
He also highlighted the top concerns of the banking and capital market players such as supply chain disruptions, a potential global recession as well as a decrease in consumer confidence which would reduce consumption.
Thus, Farrukh said, social Islamic finance such as zakat, social sukuk, sadaqah and waqf could be an essential instrument in the post-COVID-19 era to tackle many issues such as poverty, inflation and high unemployment rate.
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