Startups injecting fresh innovations to Malaysia’s Islamic Digital Economy

Malaysia has continued to strengthen its presence in the Islamic Digital Economy (IDE) and cement its international competitiveness.

Key contributing factors include its growing technology companies that serve the digitalisation of its Islamic Finance, Halal and Lifestyle sectors.

Despite the uncertainties brought about by the Covid-19 pandemic, businesses and organisations worldwide have demonstrated incredible resilience and a pivot towards digital adoption was inevitable.

Among the sectors in Malaysia that have been steadily on the rise following this period of greater digital adoption is the IDE.

The Malaysian government has recognised the potential for the IDE to serve as a vehicle for economic growth as well as a source of new revenue in the country. Accordingly, the government has leveraged technologies such as artificial intelligence, the internet of things (IoT), Web3, fintech and blockchain, among others, to grow its economy.

As part of these efforts, the Malaysia Digital Economy Corporation (MDEC), the government’s sole digital economy driver identified the IDE as a Promoted Sector under its Malaysia Digital initiative. The country’s multicultural, multilingual, digitally skilled talent pool, state-of-the-art infrastructure, robust policies and guidelines and mature investment ecosystem were building blocks that contributed towards Malaysia’s number one global ranking in Islamic Finance and Islamic Fintech.

Backed by 25 years of success stories, MDEC has been at the forefront of proactively supporting a sustainable supply of startups that have fed the burgeoning demand for digitalisation from financial institutions, government agencies, cooperatives, and the private sector. The notable shift for digital adoption has also led to a change in investor behaviour.

Malaysia: Focus on fintech

Over the years, Malaysia’s fintech ecosystem has expanded exponentially with more domestic and international firms and incumbents seeking new opportunities to collaborate, connect and co-create. As of 2021, there were 294 fintech players in Malaysia.

Marked by Malaysia’s thriving Islamic finance and fintech landscape, Ablr, a mobile-first one-stop financial services platform, made its debut in 2021 by first offering Shariah-compliant financing products that allow consumers and businesses to pay for goods and services over time.

The fintech company which started operations in Singapore in 2020, is on a mission to utilise technology to deliver innovative products that help improve people’s lives and build financially-inclusive communities.

“Being ranked the number one Islamic fintech market worldwide by the global Islamic fintech index, Malaysia has one of the most robust ecosystems supporting this industry,” explains Ian Ow, Founder and Group CEO at Ablr.

“As a fintech that provides Shariah-compliant products that seek to fill the gap for the unserved and underserved Muslim population globally, the maturity and strength in this ecosystem has helped Ablr to build a strong foundation for our Islamic headquarters in Malaysia, as a springboard to serving the needs of the Shariah economy through finance in the region and beyond.”

“I would like to thank MDEC who has helped connect us to the local Islamic ecosystem to explore market opportunities and address areas such as infrastructure, regulation and talent,” he adds.

The Halal economy in Malaysia

Malaysia is currently ranked first in the overall Global Islamic Economic Indicator ranking with respect to Islamic finance, halal food, Muslim-friendly travel, and media and recreation, according to the World Bank Group.

The Twelfth Malaysia Plan states that improving the competitiveness of the Halal industry is one of the key strategies for boosting economic growth. Malaysia’s Halal economy is dominated by the food services sector, with revenue forecast to reach $47.6bn by 2025 from $31bn in 2021. Moreover, Halal pharmaceutical sales are projected to grow to $4.8bn by 2025, from $4bn in 2021, according to a report by World Bank.

One of the companies that is driving the IDE agenda forward in Malaysia is Sinisana, a traceability solutions provider from Sarawak, a state in East Malaysia. It caters to companies that intend to allay consumer fears about the Halal nature of the beef they purchase, among others.

Sinisana Technologies began operations in 2019 to help brands out-compete their competitors by giving consumers a behind-the-scenes look at the story of the products they are purchasing. By combining multiple data streams throughout the supply chain, brands can back up their claims with real-world data to strengthen their brand equity and build long-term consumer loyalty.

“Malaysia is a global leader in the Halal economy and our Halal certification is well-regarded by Muslim consumers everywhere. This provides a strong foundation for the IDE to innovate and flourish from Malaysia to the world,” said Jonah Lau, Co-Founder and CTO of Sinisana Technologies.

“There is also a high level of digital adoption by consumers and businesses within Malaysia that facilitates digital innovation. Non-Muslim consumers in Malaysia are also open to innovation within the IDE that is beneficial to them.”

“MDEC has been with us since we began operations at the end of 2019. There have been various MDEC programmes that have been beneficial to help us gain exposure in the market. The new Malaysia Digital initiative has also lowered the barrier of entry compared to the MSC status previously, making it so much more convenient for digital economy companies to obtain support. MDEC also has a specific IDE division that has been extremely supportive of Sinisana’s growth by linking industries to tech startups,” Lau states.

Meanwhile, Islamic finance could be further bolstered in the development of Malaysia’s Halal economy by supporting the adoption of digital payments, integrating Halal advisory and marketplaces, and improving current offerings through innovative solutions such as fintech, blended finance, alternative finance and Islamic social and ethical finance.

Wahed Malaysia, a web-based Shariah investment platform under Wahed which is headquartered in New York, USA, has seen an increasing demand in Malaysia for its products and services. Wahed compliments MDEC’s proactive approach to bridging the gap between corporations, encouraging collaboration, offering business support incentives and educating a wide spectrum of investors.

“Despite the Covid-19 pandemic, we witnessed a higher mobile penetration rate in Malaysia and the pandemic helped expedite the growth of digitally savvy users,” explained Juliana Abu Bakar, Country Head and CEO of Wahed Malaysia.

“MDEC has been a collaborator to us in exploring market opportunities and addressing challenges such as infrastructure, regulation, and talent in the Islamic ecosystem.”

MDEC is a high-powered, one stop agency that supports growth and expansion of tech companies at all stages, assisting them to land and expand in Malaysia and beyond.

To learn how to get started on the process, click here

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