Malaysia Islamic finance assets projected to exceed US$800 billion

Fitch Ratings projects Malaysia’s Islamic finance industry will surpass US$800 billion (approximately RM3.27 trillion) by the end of the third quarter of 2026. This figure represents more than 150 percent of the nation’s Gross Domestic Product (GDP).

The growth is expected to be driven by a mature domestic ecosystem and strategic policy support, including measures in Budget 2027. The industry composition is projected to consist of sukuk at 47 percent, Islamic banking assets at 42 percent, Islamic funds at 8 percent, and takaful at 3 percent.

Malaysia is expected to maintain its position as the world’s largest sukuk market, accounting for 33 percent of the global outstanding sukuk total and roughly 64 percent of the domestic debt capital market. Additionally, the Malaysian government has returned to the US dollar-denominated sukuk market with a US$1.5 billion issuance, its first in five years.

While the outlook remains positive, Fitch noted that growth is subject to risks such as global market volatility, fluctuations in exchange rates, interest rates, commodity prices, and potential reductions in government sukuk issuances.