Malaysia’s Islamic Finance and Halal Expertise Attracts Russia’s Interest, Says Anwar

KUALA LUMPUR – Malaysia’s renowned expertise in Islamic banking and its burgeoning halal industry places it in an ideal position to complement Russia’s growing interest in these sectors. This was a key point emphasized by Prime Minister Datuk Seri Anwar Ibrahim during his recent meeting with Rushan Hazrat Abbyasov, the Deputy Mufti and First Deputy Chairman of the Russia Muftis Council, in Vladivostok on September 4th. Anwar’s visit to Russia, where he participated in the 9th Eastern Economic Forum (EEF), provided a platform to discuss how Malaysia’s experience in these fields can support Russia’s strategic goals in Islamic finance and halal markets.

Malaysia’s Expertise in Islamic Banking

Islamic banking in Malaysia is not new; it has been growing exponentially over the last few decades. Malaysia is widely recognized as one of the global pioneers in this field. As of 2023, Malaysia controls around 11% of the world’s Islamic banking assets, with total Islamic banking assets reaching approximately $290 billion. This growth is underpinned by a strong regulatory framework, provided by Bank Negara Malaysia, which ensures adherence to Shariah-compliant banking practices. This has helped position Malaysia as a global hub for Islamic finance, with institutions like the International Islamic University of Malaysia (IIUM) playing a crucial role in capacity building and education in Islamic finance.

For Russia, which has a significant Muslim population of over 20 million, Islamic finance offers a unique opportunity. The Russian government has shown increasing interest in Islamic banking, recognizing it as a means to diversify its financial sector and cater to the needs of its Muslim citizens. With Islamic finance becoming a global economic force, Russia’s growing interest aligns well with Malaysia’s leadership in the field.

Global Growth of Islamic Banking

Islamic banking, estimated to grow to $3.8 trillion by 2025, is no longer limited to Muslim-majority countries. Countries like the UK, Germany, and Japan have launched initiatives to capitalize on the growing interest in Sharia-compliant financial products. Russia is now following suit by exploring ways to tap into the growing demand for Islamic banking within its borders and beyond.

Anwar’s discussions with Abbyasov were focused on training, capacity building, and cooperation between Malaysian and Russian institutions. This kind of knowledge-sharing is essential for helping Russia build its Islamic finance sector. With Malaysia’s wealth of experience, Russia stands to benefit from partnerships that can introduce new financial products, enhance regulatory frameworks, and expand Sharia-compliant banking services.

Russia’s Growing Interest in Islamic Finance

Several factors drive Russia’s interest in Islamic finance. The first is the desire to diversify its economy, which has traditionally been heavily reliant on natural resources like oil and gas. Islamic finance offers an alternative means of raising capital, especially through Sukuk (Islamic bonds), which could be instrumental in funding infrastructure projects without the constraints of interest-based financing.

Additionally, Russia is keen to strengthen its ties with the broader Muslim world, particularly in the Middle East and Southeast Asia, where Islamic finance is flourishing. Partnering with Malaysia, a recognized global leader in Islamic finance, allows Russia to accelerate its learning curve and adapt quickly to global best practices. Malaysia’s regulatory expertise and well-established Islamic financial ecosystem provide Russia with a reliable template to replicate or customize for its markets.

Malaysia’s Thriving Halal Industry

Apart from Islamic banking, Malaysia is also a global leader in the halal industry. The global halal market, which encompasses food, cosmetics, pharmaceuticals, and even tourism, is expected to be worth around $3.2 trillion by 2027. Malaysia, with its comprehensive halal certification system and state-of-the-art halal production infrastructure, plays a pivotal role in this burgeoning industry. Malaysia’s Halal Development Corporation is at the forefront of ensuring that Malaysian halal products meet international standards, making them attractive for export to both Muslim-majority and non-Muslim countries.

Russia, on the other hand, is experiencing a growing demand for halal products, fueled by its Muslim population and the rising global appetite for halal-certified goods. According to a 2022 report by the Russian Halal Certification Center, the halal food market in Russia has grown by over 30% in the past five years, and this trend is expected to continue. By leveraging Malaysia’s experience and expertise, Russia can tap into the global halal economy more effectively, both in terms of domestic production and exports.

Potential for Collaboration in the Halal Industry

During his meeting with Abbyasov, Prime Minister Anwar emphasized Malaysia’s readiness to share its knowledge in the halal industry, particularly in areas such as food production, logistics, and certification. Cooperation between Malaysia and Russia could lead to a significant boost in Russia’s halal exports, particularly to countries in the Middle East, North Africa, and Southeast Asia, where demand for halal products is surging.

Malaysia’s halal certification is widely recognized for its strict adherence to Shariah principles, and this reputation gives Malaysian halal products a competitive edge in the global market. Russia, with Malaysia’s guidance, could develop its robust certification process, further enhancing its credibility in the halal industry.

Ethical Foundations of the Partnership

Anwar Ibrahim’s discussions with Russian leaders weren’t limited to economics. He also emphasized the importance of shared cultural and ethical values between Malaysia and Russia, particularly in promoting family values and moral upbringing within their respective societies. As both nations continue to advance economically, maintaining these values becomes increasingly important, especially in an era where material progress often leads to the erosion of traditional values.

“Our shared values and mutual respect can lay the groundwork for a collaboration that will benefit not just our Muslim communities, but our nations as a whole,” Anwar stated in a Facebook post following his meeting with Abbyasov. This cultural alignment between Malaysia and Russia provides a solid foundation for long-term cooperation, especially in sectors that are deeply rooted in ethical principles, such as Islamic finance and the halal industry.

Broader Implications of Malaysia-Russia Collaboration

The partnership between Malaysia and Russia has broader geopolitical implications as well. With Malaysia acting as a bridge between Russia and the wider Muslim world, the two countries can strengthen their ties with key Islamic markets. This can be particularly beneficial for Russia as it looks to diversify its trade relationships in the face of global economic sanctions and geopolitical shifts.

Malaysia, on the other hand, stands to benefit from enhanced trade with Russia, particularly in the energy sector. As the world transitions toward more sustainable forms of energy, Malaysia’s expertise in Islamic banking could help facilitate Russia’s investment in renewable energy projects. Additionally, Malaysia’s halal industry could find new markets in Russia, creating a mutually beneficial trade relationship.

Building Technological Ties

Anwar’s visit also focused on expanding educational and technological cooperation between the two countries. Institutions such as the International Islamic University Malaysia (IIUM) and the Islamic Art Museum were identified as key partners in fostering greater cultural and educational exchange between Malaysia and Russia.

The exchange of knowledge in fields like Islamic finance, halal production, and Shariah-compliant technologies could pave the way for future collaborations in other areas such as digital finance and blockchain technologies, both of which are increasingly being integrated into Islamic financial systems.

A Strategic Partnership for the Future

As the world’s geopolitical and economic landscape continues to evolve, the partnership between Malaysia and Russia, rooted in shared values and mutual economic interests, is poised to grow stronger. Malaysia’s expertise in Islamic banking and its leadership in the halal industry offer Russia a reliable blueprint for success in these emerging sectors. By fostering greater cooperation in these fields, both nations are well-positioned to enhance their global standing and benefit their respective Muslim communities.

With the potential for further collaboration in finance, halal industries, education, and cultural exchange, the partnership between Malaysia and Russia could become a model for other nations looking to strengthen ties within the global Islamic economy. The discussions held at the Eastern Economic Forum mark the beginning of a new chapter in this strategic partnership, one that could reshape the future of Islamic finance and halal industries in both countries.