Malaysia keeps top spot in Islamic finance development ranking for 14th year in a row

For the 14th straight year, Malaysia has held the top spot among the most advanced Islamic finance markets worldwide in the 2026 Islamic Finance Development Indicator (IFDI) report, Bernama reported, and the study also found that worldwide Islamic finance expanded nine per cent to US$6.5 trillion (US$1 = RM4.07).

Scores across 140 countries

The report, titled "Growth Amid Headwinds", assessed 140 countries using 2025 data. With an overall score of 136, Malaysia was well ahead of Saudi Arabia, which got 113, and of the United Arab Emirates (UAE), which managed 95. Indonesia scored 80 and Pakistan 74, rounding out the top five.

The London Stock Exchange Group produced the report in partnership with the Islamic Corporation for the Development of the Private Sector. It noted notable gains outside the top five for Türkiye, Tanzania, Kenya, Benin, Azerbaijan and Uzbekistan.

Malaysia ranked first worldwide in financial performance (150), governance (98) and sustainability (156). It earned the maximum 200 for awareness and placed second in knowledge development with 87.

Market size and sukuk

Malaysia remained the third-largest Islamic finance market, with total assets of US$862 billion in 2025. Iran had US$2.19 trillion and Saudi Arabia US$1.47 trillion. Malaysia's sukuk outstanding stood at US$359 billion by the close of 2025, a narrow gap behind the US$369 billion held by Saudi Arabia.

The report pointed to Khazanah Nasional Bhd's first tokenised sukuk in the country, issued with the Securities Commission Malaysia in May 2026 and raising RM100 million. CIMB Group finished a pilot in August for a wakala sukuk worth RM1.68 billion, which combined RM1.38 billion of tokenised paper with RM300 million issued in the conventional format.

The report also highlighted plans under the 13th Malaysia Plan (2026-2030) to strengthen the sector through better cross-border financial links, ESG-linked Islamic finance and faster digitalisation.

Comment from Bank Negara Malaysia

Bank Negara Malaysia Governor Datuk Seri Abdul Rasheed Ghaffour said the outcome mirrors forty years of continued work to create an Islamic financial ecosystem that is both broad in scope and forward-looking. He told Bernama: "As we move forward, Bank Negara Malaysia remains committed to continuing to work with the industry and our partners to advance innovation with purpose and ensure Islamic finance continues to deliver meaningful impact to the economy and society."

Global picture

Growth across Islamic banking, sukuk, takaful and Islamic investment funds underpinned the nine per cent rise in global Islamic finance assets. Islamic banking is still the biggest segment at about 71 per cent of industry assets, and the industry is projected to pass US$10.5 trillion by 2030.