Fintech in Malaysia and Islamic Finance
The majority of the people living in Malaysia are Muslim. Therefore, they require a form of fintech which is compatible with their religious beliefs. The large population of Muslims in Malaysia as well as other Southeast Asian nations has brought about the need for expansion and growth of fintech companies which are involved in Islamic finance. Malaysia has taken advantage of this fact; today, many of Malaysia’s fintech companies have involved themselves in Islamic finances. The country has also hosted several Islamic start-ups from abroad as well as their initiatives.
Growth of Malaysia’s Fintech Industry
It is evident that the fintech industry of Malaysia has significantly grown to the point where it is at right now; Malaysia’s fintech industry is one of the most developed in Southeast Asia. The government has also offered funding to upcoming innovators in the country’s fintech industry. Encouraging potential innovators by setting aside necessary funds and creating a favorable business environment is one of the ways through which the government has caused the industry to grow rapidly within a short period of time.
The fintech industry of Malaysia has also grown with regard to the number of active fintech companies in the country. The industry has seen the start of many fintech companies which have been operating in the country; some have expanded to other countries as well. This growth has allowed the fintech market of Malaysia to be able to challenge the markets of other countries and present itself as a major player in the regional fintech scene. Furthermore, the increase in fintech companies has created many additional employment opportunities for those seeking employment in Malaysia.
Malaysia’s fintech companies have generally been expanding at an impressive rate. The expansion of these businesses has increased the size of their respective client bases. As the revenue of these fintech companies grows, they will in turn pay larger amounts of taxes to the government of Malaysia, thus driving the country’s economic growth. Therefore, this recent expansion of many of Malaysia’s fintech companies has led to positive developments for the country’s economy.
Developments and changes to the digital laws of Malaysia also serve as proof of the growth of fintech in Malaysia. This is because the increasing prominence of fintech in the country has led to increased regulatory amendments in Malaysia to ensure that the government is able to monitor the fintech companies all over the country. This shows that the industry’s impact in the country has been noticed by the Malaysian government.
Contribution of Fintech to Malaysia’s Economic Growth
The fintech industry of Malaysia, just as is the case with any other country’s fintech industry, is concerned with online payments and general online transactions. Fintech developments make such transactions easier. The fintech industry of Malaysia has also done much to contribute to the economic growth of Malaysia. One way in which it has done so is by increasing its total GDP. The business operations of the various fintech companies have allowed the industry to contribute significantly to the Malaysian government’s revenue through taxes. The taxes paid in turn have helped improve the delivery of the services offered by the country’s fintech companies. and the country’s budgeting.
The fintech industry has also done much to create employment opportunities within the country. The opportunities created relieve much pressure on the economy. The government will also not be forced to create additional jobs for people who would otherwise be unemployed.
International Reputation of Malaysia’s Fintech Industry
The Malaysian Digital Economy Corporation Sdn Bhd (MDEC) has in the past mentioned the potential of Malaysia to become a digital hub for ASEAN because it is well-placed to increase its rate of digital growth relative to other Asian countries. Ernst & Young’s ASEAN FinTech Census which was conducted in 2018 referred to Malaysia as an “emerging fintech hub in Asia”. The increasing digitalization of the economy of the country has made Malaysia’s fintech industry prosper while also attracting investors who have been taking the country’s fintech industry to new heights since 2016. Therefore, Malaysia is a fintech hub within the Southeast Asian region. According to the World Economic Forum’s rankings known as the Network Readiness Index, Malaysia is ranked 31st out of 139 countries with regard to readiness for a digitized economy and society. This ranks it ahead of every other Southeast Asian nation except for Singapore. Therefore, Malaysia is doing well as far as network readiness is concerned. Furthermore, the country is only second to Singapore in the region in fintech development.
These facts coupled with support from the government, regulators, and industry players provide Malaysia with the opportunities and potential as an emerging fintech market which is rapidly becoming one of the most vibrant and robust in Southeast Asia.
The fintech industry in Malaysia has been growing at an impressive rate. Many fintech companies of Malaysia even offer services to customers in other countries. Most importantly, the industry contributed positively towards the growth of the country’s economy while also creating numerous employment opportunities.