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Malaysia Leads in Islamic Finance Development Ahead of Saudi, UAE

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Malaysia Leads in Islamic Finance Development Ahead of Saudi, UAE

Malaysia has retained its position as the world’s most developed Islamic finance market for the 14th consecutive year.

The 2026 Islamic Finance Development Indicator (IFDI) report by the Islamic Corporation for the Development of the Private Sector (ICD) and London Stock Exchange Group (LSEG) ranked Malaysia first among 140 countries.

Malaysia recorded an overall score of 136, ahead of Saudi Arabia at 113 and the United Arab Emirates (UAE) at 95. Indonesia and Pakistan completed the top five.

The index measures Islamic finance development across five areas: financial performance, governance, sustainability, knowledge and awareness.

Malaysia led in financial performance, governance and sustainability with scores of 150, 98 and 156 respectively. It also achieved the maximum score of 200 for awareness and ranked second in knowledge with a score of 87.

Malaysia was the world’s third-largest Islamic finance market by assets in 2025, with US$862 billion, behind Iran and Saudi Arabia.

The country also held US$359 billion in outstanding sukuk, just behind Saudi Arabia’s US$369 billion.

Malaysia has also made progress in tokenising Islamic financial instruments, including Khazanah Nasional’s RM100 million tokenised sukuk issuance in May 2026.

CIMB Group completed a RM1.68 billion wakala sukuk pilot in August, comprising RM1.38 billion in tokenised sukuk and RM300 million in conventional-format sukuk.

Malaysia recently announced plans to introduce tokenised government savings sukuk for retail investors under Budget 2027.

Bank Negara Malaysia also launched its SSDS+ platform to support the issuance, recording and custody of tokenised bonds and sukuk.


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