KEYNOTE ADDRESS
BY
HIS ROYAL HIGHNESS
SULTAN NAZRIN MUIZZUDDIN SHAH
THE SULTAN OF PERAK DARUL RIDZUAN AND ROYAL
PATRON OF MALAYSIA’S ISLAMIC FINANCE INITIATIVE
AT THE
MALAYSIA INTERNATIONAL ISLAMIC FINANCIAL CENTRE (MIFC) – UNITED KINGDOM BUSINESS FORUM
DATE: TUESDAY, 10 SEPTEMBER 2024 TIME: 9:30AM
VENUE: HYATT REGENCY LONDON – THE CHURCHILL, LONDON
“Sustainable Future: Leading the Change”
1. It gives me great pleasure to be here with you this morning at this Malaysia-United Kingdom business forum. There are few subjects more pressing, at the present moment, than sustainability, and so I am delighted that this is the focus of our event today. This bilateral forum represents a meaningful opportunity to forge deeper connections between our countries, exploring how we can further collaborate in ways that are mutually beneficial, productive and impactful, not only for ourselves, but for the planet as a whole.
2. All of us here, I believe, share the same fundamental objective of promoting a more sustainable future. We all understand how much this matters; because we all understand the dire consequences of not taking action, from global warming, pollution and biodiversity loss, to the increasing geopolitical tensions that arise from resource scarcity and planetary disasters. To avoid this bleak vision, we must rapidly forge a path to a sustainable future: one where economic growth goes hand in hand with social inclusion and environmental stewardship. This means that any actions taken to meet our present needs must not compromise the ability of future generations to meet their own. My remarks today are anchored in the belief that securing an inclusive and a sustainable future requires decisive leadership and collective action. The challenges we face – whether it be climate change, resource depletion, or social inequity – necessitate a novel approach to business and finance that transcends borders and boundaries.
3. Achieving this vision demands a commitment to systemic change, where policy, technology and investments come together to drive progress. By aligning our efforts with sustainability goals, we not only address pressing global challenges, but also unlock new opportunities for innovation and prosperity.
4. I have spoken many times in the past – including, most recently, only a few days ago in Oxford! – about the ways in which Islam, and Islamic finance, are uniquely poised to further the global sustainability agenda. A brief study of Islamic principles reveals that concepts like sustainability, social equity and environmental conservation are deeply rooted in Muslim tradition. The Holy Quran, for example, reminds us:
“So give just measure and weight, and don’t give people less than the value of their goods. Don’t sow corruption in the land now it has been set in order. This will be better for you if you are believers.”[1]
Sustainability, responsibility, generosity and risk-sharing: these values are fundamental to Islamic finance. And they are urgently needed in our world, now more than at any time in history. We need to find ways to prosper that protect our planet and its people from harm. Islamic finance, I believe, represents a bold solution to this challenge.
5. Indeed, I think it is no coincidence that Islamic finance has grown so impressively in recent years, given that its values and operations represent so much of what our planet urgently needs. Over the last few decades, the Islamic finance industry has emerged as a viable modality for conducting business and economic activity. Global Islamic finance assets surpassed US$4.5 trillion in 2022, a more than 250% increase from their more modest size of US$1.7 trillion in 2012. Currently, over 1800 Islamic financial institutions in more than 50 countries are offering Islamic finance services. Whether to meet society’s inclusion needs or to capitalize on business opportunities presented by the markets, the global Islamic finance ecosystem has continued to expand, and the industry is now projected to reach US$6.7 trillion in asset size by 2027.[2] This remarkable growth represents a huge opportunity for the Islamic finance sector to now take on a leading role in forging a more sustainable future for the planet.
6. And, if Islamic finance is to lead, then Malaysia as a country will have an important part to play. In recent decades, Malaysia has emerged as one of the leading Islamic finance markets: Islamic banking now accounts for 45% of total financing in the Malaysian banking system, and that growth is projected to continue at a rapid pace.[3] Islamic capital markets are now one of the key contributors to Malaysia’s economy, accounting for nearly 64% of the country’s capital market.[4] The Islamic fintech market alone, in Malaysia, was estimated to be worth around US$11.1 billion in 2022/3, and that figure is projected to more than double by 2027.[5] All of this means Malaysia is uniquely positioned to leverage the existing mechanisms of Islamic finance to pursue sustainable growth.
7. To effect the kind of rapid change that is needed in the global economy, however, no single country can act alone. We need international co-operation: and that is why bilateral events in Britain such as today’s are so important. The historical ties between Malaysia and the United Kingdom have laid a solid foundation for an ever-evolving partnership that promises significant growth opportunities. Trade between Malaysia and Britain has flourished over the years, standing at RM17.3 billion (US$3.79 billion) last year.[6] Investments between our two countries also remain strong. As of June 2024, Malaysian companies had invested some US$7.1 billion (£5.4 billion) in the UK, while the UK’s foreign direct investment in Malaysia totalled US$7 billion (£5.3 billion).[7] Ours is a prosperous partnership: one which, if guided by the right Environmental, Social and Governance (ESG) framework, has the potential to do much good for the planet.
Ladies and gentlemen:
8. It’s clear that we have powerful tools at our disposal: a flourishing Islamic finance industry, both in Malaysia and around the world, and an historic partnership between Britain and Malaysia that strengthens year on year. But we also face a monumental task: that of redressing the vast inequalities that tarnish our global community, and reversing the terrible damage already done to our planet, before it is too late. So, how do we capitalize on our strong foundations, and put our available tools to the best possible use? In what remains of my speech, I wish to highlight three key imperatives where, I believe, finance and business communities can drive meaningful progress towards achieving a sustainable future.
The First Imperative: Sustainable Investment and Finance
9. First, sustainable investment must continue to be the impetus behind our efforts to deliver impact. Sustainable investment holds the key to accelerating the progress of the United Nations Sustainable Development Goals (SDGs), which serve as our global roadmap to shift the world onto a more sustainable and resilient path. In its latest SDG progress report, the UN estimated that achieving the 2030 Agenda demands an annual influx of nearly US$4 trillion per year in developing countries alone.[8] To achieve net-zero emissions by 2050, meanwhile, requires US$9.2 trillion in annual average spending on physical assets.[9] There is an urgent need for innovative and collaborative approaches to bridge this funding gap.
10. While we have seen notable progress in rallying the commitment of national leaders and advancing the tools to monitor SDG progress, the critical investments needed to fuel this transition remain largely unmet. These investment needs are further compounded by the spillover effects of Covid-19, as well as ongoing conflicts and the burgeoning climate crisis, all of which have exacerbated existing inequalities and heightened the challenges we face.
11. This is where Islamic finance offers a potential solution. Rooted in principles of ethical practices, fairness, and equitable risk-sharing, it provides a framework that naturally aligns with sustainability and presents diverse funding options, including blended and social finance. It is well-positioned to address funding gaps that impede global progress and can serve as a tool for channelling resources where they are needed most.
12. Sustainable and Responsible Investment (SRI) sukuk are just one mechanism through which Islamic finance can provide ethical, sustainable funding, and Malaysia is a regional leader in this area, with total outstanding SRI issuances exceeding US$6 billion, and with the potential to scale up yet further.[10] Incidentally, I was pleased to discover that the UK is one of the few countries outside the Organisation of Islamic Cooperation (OIC) to have also issued sovereign sukuk twice, providing a supply of high-quality liquid assets that are Shariah compliant. Meanwhile, estimates suggest that global zakat contributions – the obligatory ‘tax’ paid by Muslims to help the less fortunate – could be worth as much as US$1 trillion each year.[11] That is a vast amount of money, with the potential to do a vast amount of good.
13. Islamic finance, then, has both the instruments at its disposal, and the values at its core, to help fill global funding gaps in a way that balances long-term value creation with short-term needs, while maintaining a commitment to social justice and inclusion. This is the very essence of sustainable development. I believe it is incumbent upon players in the industry, therefore, to direct their efforts towards advancing the global sustainability agenda.
The Second Imperative: Scaled-Up Innovation and Technology
14. If embedding values of sustainability in finance is our first imperative, then leveraging technology must be our second. The global funding crisis we face is so significant that innovation is not merely an advantage – it is the cornerstone of progress. With rapid advancements in technology and the shifting global ecosystem, innovation can empower us to confront current and emerging challenges and to enhance the quality of our growth over the long term. Again, Islamic finance has the potential to be a trailblazer in this area, with Islamic fintech industry already worth US$79 billion as of 2021, and projected to grow at a remarkable rate, to US$179 billion by 2026.[12]
15. The importance of harnessing technology to grow and mobilize funds is highlighted by The Future of Growth Report by the World Economic Forum (WEF). Here, innovation is integrated as one of the fundamental pillars – alongside inclusiveness, sustainability, and resilience – in its new growth framework. By moving beyond traditional GDP metrics, this refined approach to understanding growth is redefining what genuine progress looks like and offering a more comprehensive view of the true nature and quality of our collective advancement.[13]
16. Central to this pursuit of innovation, however, is the challenge of optimising talent availability and resources. The WEF’s findings reveal a growing disparity in digitalization rates, which leads to persistent economic divides and missed opportunities for technological advancement. Lower income countries often lack access to the required physical resources and capital, while higher income economies are increasingly facing a shortage of skilled talent. Both of these factors hamper innovation. Yet, within this challenge lies a remarkable opportunity for developing economies. They can step forward to offer essential services and expertise in various sectors – ranging from engineering and design to healthcare and education. Such collaboration allows for a valuable exchange of knowledge and skills that can help to bridge the innovation divide in ways that foster mutual growth and progress.
The Third Imperative: Global Partnerships
17. Indeed, the final imperative I wish to highlight today is international collaboration. I can hardly overstate the importance of collective, co-ordinated efforts in pursuing the sustainability agenda. Individual countries cannot succeed by themselves: we need partnerships and synergies on a global scale.
18. But what makes for an effective collaboration? A report from the Harvard Kennedy School on successful partnerships for sustainable development highlights three critical factors: (1) shared purpose; (2) operational alignment; and (3) mutual accountability.[14] Shared purpose necessitates unwavering will, translated into tangible and impactful actions. Operational alignment ensures that all partners are working in concert towards common objectives, with well-coordinated strategies and the efficient allocation of resources. Mutual accountability, meanwhile, is essential for maintaining trust, ensuring that each partner lives up to their commitments, and safeguarding the integrity and effectiveness of the partnership.
19. I firmly believe that our two countries, Malaysia and Britain, can serve as a model for productive, impactful collaboration between nations separated by vast geographical distances. We are connected, of course, by being members of the Commonwealth: but beyond that, the relationship between our nations encompasses trade and investment, as well as critical sectors such as education, finance, and technology. This reflects not only the strength and breadth, but also the sophistication of our partnership.
20. As we look to the future, the importance of this relationship will become even more pronounced, particularly when considering the economic and environmental trajectories of our two nations. The United Kingdom presents a compelling example of balancing economic growth with environmental responsibility. Since 1990, Britain has managed to reduce its emissions by 50% while still expanding its economy by more than two-thirds, demonstrating that it is possible to balance growth and environmental impact.[15] The partnership between Malaysia and Britain, meanwhile, has also proved fruitful in the area of driving growth, innovation, sustainable infrastructure and green finance simultaneously. For example, the Malaysia-UK PACT programme, which concluded in 2023, supported and continues to encourage Malaysia’s low-carbon transition, with the value of projects amounting to £2.6 million.[16] So let us now build on the important work we have already done, the strong foundations we have already laid. Let us continue to use our partnership to advance green finance and sustainability, in our own nations and beyond.
Ladies and gentlemen:
21. Mahatma Gandhi (d. 1948) once said, “The Earth provides enough to satisfy every man’s needs, but not every man’s greed”.[17] His message is one of both optimism and a warning. On the one hand, his words remind us that the challenge we face can be met: our mother earth will provide if we treat it and our fellow humans with consideration and respect. But that “if” is crucial: for if humanity continues to exploit resources and pursue self-interest at the expense of others, we will pass the tipping point; we will pass a point of no return. And so I hope that Gandhi’s message of hope and caution will resonate with all of us, both during and after this event. It reminds us that we need to act; and it reassures us that, in acting, we can overcome the challenges we face.
22. This MIFC-UK Business Forum is a demonstration of our collective will and commitment to take action: to grow sustainable investments together, building on the long-standing economic ties of our two nations. By capitalizing on our shared values and experiences, we can lead the change and pave the way for a future that harmonizes economic prosperity with environmental responsibility, and ensures that every person’s needs are met. On that note, I wish you all a fruitful and productive discussion.
- Surah al-A‘raf, 7:85. ↑
- Islamic Finance Development Indicator (IFDI), ‘ICD – LSEG Islamic Finance Development Report 2023: Navigating Uncertainty’, LSEG (28 November 2023). ↑
- Bank Negara Malaysia, Financial Stability Review: Second Half 2023 (Kuala Lumpur: Bank Negara Malaysia, 2024); ‘Islamic Bank Financing in Malaysia Projected to Double in a Decade, Says S&P’, Malay Mail (16 July 2024). ↑
- Securities Commission Malaysia, Islamic Capital Market Statistics (December 2023). ↑
- Amanda Siddharta, ‘Market Size of Islamic Fintech in Malaysia from 2020 to 2023, with a Forecast for 2027’, Statista (19 June 2024). ↑
- Malaysia External Trade Development Corporation (MATRADE): Trade Performance 2023. ↑
- Bank Negara Malaysia. ↑
- United Nations, The Sustainable Development Goals Report 2024 (New York: United Nations, 2024), 3. ↑
- McKinsey & Company, The Net-Zero Transition: What It Could Cost, What It Could Bring (Washington, DC: McKinsey Global Institute, 2022). ↑
- Securities Commission Malaysia. ↑
- Zenobia Ismail, Using Zakat for International Development, K4D Helpdesk Report (Birmingham: Univ. of Birmingham, 2018). ↑
- Mohammed Awais Anwar, ‘Islamic Fintech: Road to 2024, the Golden Year?’, FootAnstey (18 January 2024). ↑
- World Economic Forum, The Future of Growth Report 2024 (Geneva: World Economic Forum, 2024). ↑
- Jane Nelson, Partnerships for Sustainable Development: Collective Action by Business, Governments and Civil Society to Achieve Scale and Transform Markets (Cambridge, MA: Harvard Kennedy School, 2017). ↑
- The Rt Hon Claire Coutinho MP, ‘UK First Major Economy to Halve Emissions’ UK Government Press Release (6 February 2024): https://www.gov.uk/government/news/uk-first-major-economy-to-halve-emissions. ↑
- UK Partnering for Accelerated Climate Transitions (UK PACT), see https://www.ukpact.co.uk/ . ↑
- Neha Walia, ‘Remembering Mahatma, His Philosophy on Environment’, The Tribune India (3 October 2019). ↑