Islamic Digital Economy (IDE) is poised to become the next big thing. According to the State of the Global Islamic Economy Report 2022 by DinarStandard, Muslim spending reached US$2 trillion in 2021 on food, pharmaceuticals, cosmetics, travel and media - all contributing towards a borderless IDE that offers limitless potential.
 
This spending is forecasted to reach US$2.8 trillion by 2025 at a cumulative annual growth rate of 7.5%.
 
It is important to address the misconception that the sector is exclusively for Muslims. Instead, IDE is based on the principles of just or fairness, transparency, strong governance, and ethical conduct in its practices and services. These are universal values not restricted by faith and serve as an alternative to the Western economy.

For example:

• Halal traceability centres on integrity and high standards along the production chain, ensuring consumers have peace of mind about a product's Halal authenticity.
• Islamic financial instruments such as sukuk provides greater transparency to investors than regular bonds through asset backing.
• Muslim fashion revolves heavily around modesty and wearing loose clothes that provide greater comfort.

Malaysia is firmly established as a premier player on the international stage for Islamic Finance and Fintech. With its robust economy, MDEC under the Ministry of Communications and Digital has been entrusted to drive forward Malaysia's IDE.

Capitalising IDE potential
Digital inclusivity has been instrumental in furthering Malaysia's economy as it is aligned with the nation's strong Islamic economy fundamentals.

Several factors have strengthened Malaysia's leading role as a global IDE. The country has a mature Islamic finance and Halal ecosystem, backed by solid talent and Shariah experts. It is an innovation centre with many of the world's first market movers in Islamic finance solutions, products and services, on top of having strong regulatory support with definitive guidelines for fintech and Halal investments.
 
In 2022, the country had over 50 IDE companies consisting of both local and global players, most of which are fintech related.

Progress into the future
Malaysia is positioning itself as a leader in the Islamic digital landscape, with IDE providing an impetus for digital inclusion. MDEC believes that facilitating growth within this flourishing IDE community will promote economic progress and enhance the nation's status in the Islamic digital landscape. The increasing number of affluent Muslims also offers immense potential for development.