Malaysia needs to develop a vibrant and holistic blueprint at the national level to build a successful Islamic finance-based digital economy in the country, according to Mohd Daud Bakar, executive chairman of global shariah advisory firm Amanie Group and chairman of the Shariah advisory council for Malaysia’s central bank.
As digital economy encompasses activities that cut across all ministries and agencies, a national-level comprehensive approach would act as an enabler for the sector.
There needs to be a special task force or a dedicated agency transcending all agencies to play the agenda of Islamic digital economy across the board, he noted.
“As much as we would like to see bottom-up approach, we need a kind of intervention – though on a minimalist level – from the government to put this agenda on the map of new economic growth as we have done tremendously in the space of Islamic finance and banking,” Daud told DEALSTREETASIA in an interaction.
Malaysia set a precedent in the Islamic digital economy when MDEC (Malaysia Digital Economy Corporation) launched the world’s first dedicated framework for the sector – Islamic Digital Economy (IDE) Mi’yar in late 2017.
There are over 1.8 billion Muslims across the world, providing vast opportunities for the Islamic economy. By 2030, the Muslim population is estimated to make up 27 per cent of the global population. Moreover, the overall Islamic economy is expected to grow to $3 trillion by 2021.
Hence, the global Islamic market is full of potential and more needs to be done to educate the world of Malaysia’s potential in Islamic digital economy, said Daud.
In the venture capital sector, Kuala Lumpur and Shanghai-based VC firm Gobi Partners had coined a new segment since 2016 that aims to tap into faith-based ventures called ‘TaqwaTech’.
“There is a big opportunity there (TaqwaTech). A lot of people do not realise how big that market is. It is a standalone sector where we can cater to countries like Malaysia, Indonesia, even the Middle East, India, Pakistan, Bangladesh,” said Gobi’s managing partner Thomas Tsao.
One of Gobi’s portfolio companies – Malaysia-based travel startup Tripfez had merged with Middle East online travel agency Holidayme last November to form one of the world’s largest Muslim-focused online travel agencies.
The launch of IDE was a humble beginning for Malaysia, said Daud, who will be speaking at Malaysia Tech Week 2019 in Kuala Lumpur on June 17 to 21.
“It was not meant to be exclusive and ultimate. But, to a large extent, it helped everyone to understand the essence of doing Islamic digital economy. This may be useful in the initial phase of the launching any new concept to the market,” he said.
Considering Indonesia has a significantly larger Muslim population than Malaysia, one may wonder how could the latter emerge as the global leader in the Islamic digital economy space.
At the end of day, the success of Islamic digital economy depends on critical success factors under the new economic landscape, said Daud.
“What is more relevant is the legitimacy or perhaps the quality of Shariah parameters being adopted by Malaysian players so that the global Muslim community are in the position to embrace them without having any hesitation, thus the importance of cutting-edge knowledge in Shariah knowledge in relation to all digital-based products and services,” he noted