{"id":36579,"date":"2026-08-27T05:36:34","date_gmt":"2026-08-27T05:36:34","guid":{"rendered":"https:\/\/gsrra.com\/?p=36579"},"modified":"2026-08-27T05:36:34","modified_gmt":"2026-08-27T05:36:34","slug":"malaysias-strongest-card-in-multi-hub-push-could-be-islamic-finance","status":"publish","type":"post","link":"https:\/\/gsrra.com\/?p=36579","title":{"rendered":"Malaysia\u2019s strongest card in multi-hub push could be Islamic finance"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong><em>The country is not short of financial-hub options; the challenge is making them come together<\/em><\/strong><\/p>\n\n\n\n<ul id=\"splide01-list\" class=\"wp-block-list\">\n<li><img fetchpriority=\"high\" decoding=\"async\" width=\"2560\" height=\"1440\" src=\"https:\/\/cassette.sphdigital.com.sg\/image\/businesstimes\/e5c67f9d6d9dc92ff8609a1d829867c7a486971d379b29ac9facce3822052bd8?w=960&amp;dpr=1&amp;f=webp\" alt=\"From Labuan to the purpose-built Tun Razak Exchange in Kuala Lumpur, Malaysia has deployed special rules, incentives and infrastructure to attract global financial activity.\"><\/li>\n<\/ul>\n\n\n\n<ul id=\"splide02-list\" class=\"wp-block-list\">\n<li>From Labuan to the purpose-built Tun Razak Exchange in Kuala Lumpur, Malaysia has deployed special rules, incentives and infrastructure to attract global financial activity. PHOTO: TRX<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>South-east Asia is building a new generation of financial centres to draw global capital. The second instalment in our <\/strong><a href=\"https:\/\/www.businesstimes.com.sg\/international\/asean\/can-bali-swop-beach-capital-global-capital-without-skyscrapers\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>series<\/strong><\/a><strong> examines Malaysia\u2019s multi-hub strategy.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"> From Labuan\u2019s offshore financial jurisdiction off the coast of Sabah, to Kuala Lumpur\u2019s purpose-built Tun Razak Exchange (TRX), Malaysia has assembled different pieces of an international financial ecosystem, backed by targeted rules, incentives and infrastructure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Forest City \u2013 while not formally an International Financial Centre (IFC) \u2013 adds a newer and more targeted play, having been designated a <a href=\"https:\/\/www.businesstimes.com.sg\/international\/asean\/malaysias-forest-city-family-office-push-gains-traction-ecosystem-gaps-remain\" target=\"_blank\" rel=\"noreferrer noopener\">special financial zone<\/a> in 2023.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The three operate under different models.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Labuan IBFC, established in 1990, operates as an international financial jurisdiction with its own regulatory and tax framework, specialising in cross-border banking, insurance, wealth management and international business.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It has around 5,000 active entities and business structures, including international banks, insurers and digital financial-services providers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Asean Intelligence<a href=\"https:\/\/www.businesstimes.com.sg\/keywords\/asean-intelligence-2026?ref=asean-intelligence-article-banner\" target=\"_blank\" rel=\"noopener\"><\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">TRX, by contrast, is an onshore financial district designed to cluster banks, professional-services firms, technology companies and talent within Kuala Lumpur.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Forest City\u2019s newer Special Financial Zone in Johor is a more targeted play, focused on family offices, fintech and financial global business services, with incentives including a 0 per cent tax rate for qualifying single-family office vehicles.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The harder task now is to turn these disparate pieces into a coherent ecosystem, with Kuala Lumpur at its centre, rather than have multiple hubs compete for the same capital and talent.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Joseph Cherian, CEO, president and dean of Asia School of Business, said Malaysia needs a clearer hierarchy.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cYou cannot have Labuan, Penang, Johor and every other location all saying, \u2018We want to be the financial centre.\u2019 You need to choose your main international financial centre,\u201d he said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">He suggested that Kuala Lumpur and TRX serve as the country\u2019s principal international financial hub with the other centres developing specialised roles.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Penang proposed creating an IFC in 2025 to finance its tech ecosystem, but the initiative has yet to secure federal approval.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Building more than a financial district<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There are signs that Malaysia has already built some of the physical foundations of a financial cluster.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">At TRX, <a href=\"https:\/\/www.businesstimes.com.sg\/international\/asean\/anwar-announces-incentives-companies-moving-malaysias-international-financial\" target=\"_blank\" rel=\"noreferrer noopener\">major financial institutions<\/a> including HSBC, Prudential and Affin Bank, sit alongside technology companies such as Ant International, consultants and other professional-services firms.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Yulia Nikulicheva, head of research and advisory at JLL Malaysia, said the concentration represents \u201cgenuine physical clustering of financial institutions rather than dispersed symbolic presence\u201d.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Government incentives have helped, but she said TRX\u2019s development has also benefited from its connectivity as a major rail interchange, green credentials, premium office space and a growing concentration of financial-sector talent.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cUltimately, IFC success depends on ecosystem functionality rather than branding,\u201d she told <em>The Business Times<\/em>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Prof Cherian noted that physical clustering is only the beginning. \u201cAt the moment, <a href=\"https:\/\/www.businesstimes.com.sg\/international\/asean\/malaysia-s-exchange-106-commands-highest-office-rents-kuala-lumpur\" target=\"_blank\" rel=\"noreferrer noopener\">TRX is a very successful property development<\/a>, but that alone does not make it an international financial centre,\u201d he said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cYou need intellectual capital. You need people who understand finance, markets, regulation, asset management, capital raising and product development,\u201d he said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">He added that financial capability has to be deliberately built, noting that Labuan already has deeper institutional infrastructure after decades as an offshore financial centre.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">He suggested drawing on expertise from institutions such as Bank Negara Malaysia, the Securities Commission, Employees Provident Fund, Permodalan Nasional and the Ministry of Finance to help build out TRX\u2019s financial ecosystem.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The focus, he said, should be on developing new financial products, attracting asset managers and internationalising Malaysia\u2019s sukuk market.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">One hub, several spokes<\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/cassette.sphdigital.com.sg\/image\/businesstimes\/85f56944b153efd4fd009c39375360f2bba0d20725d5d43d8c261238ae3df002\" alt=\"\"\/><figcaption class=\"wp-element-caption\">Labuan International Business and Financial Centre, established in 1990, operates as an international financial jurisdiction with its own regulatory and tax framework.&nbsp;PHOTO: LABUAN IBFC<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Malaysia\u2019s efforts to develop multiple financial centres present another challenge: whether spreading activity across different locations undermines the concentration that makes financial centres successful.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Wong Chin Yoong, professor of economics at Universiti Tunku Abdul Rahman, describes Malaysia\u2019s emerging approach as a hybrid between jurisdiction-based financial centres and economic agglomeration.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The latter can generate greater spillovers into the domestic economy through jobs, knowledge transfer, urban development and tax revenue, he said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But agglomeration also means that not every financial centre is likely to prosper equally, as denser concentrations of institutions tend to attract more talent and investment at the expense of competing clusters, he said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While different centres can theoretically specialise, the boundaries between wealth management, fintech, family offices and corporate banking are often blurred, he added.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Under Prof Cherian\u2019s proposed hub-and-spoke model, Labuan could retain its offshore role while developing areas such as Islamic finance and tokenisation, while Johor could specialise in Islamic wealth management and family wealth.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Fung Mei Lin, private leader at PwC Malaysia, similarly sees the different centres as potentially complementary.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">She said Labuan\u2019s strength lies in international and cross-border structuring, while TRX provides institutional credibility, connectivity and access to Malaysia\u2019s broader financial-services ecosystem.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Forest City, meanwhile, could provide a dedicated platform for family offices and private wealth.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Islamic finance: a common thread<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">One competitive strength could help tie these different pieces together: Islamic finance, a field Malaysia has spent decades cultivating.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Prof Cherian said Malaysia\u2019s \u201cunrivalled edge in the region\u201d lies in the decades it has spent building expertise in sukuk, Islamic banking, takaful and syariah governance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Rather than trying to replicate a conventional financial centre and adding Islamic products around its edges, he argues Islamic finance should become the organising principle of Malaysia\u2019s IFC strategy.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">One opportunity would be to internationalise Malaysia\u2019s sukuk market by encouraging major multinational companies operating in the country to issue US dollar-denominated sukuk and distribute them to global investors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cIf you want an Islamic financial centre, come to Malaysia. We are among the best in the world,\u201d Prof Cherian said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The objective, he argues, should not be to defeat Singapore but to build capabilities that make the two centres valuable to each other.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cMalaysia doesn\u2019t have to defeat Singapore or Hong Kong\u2026 It has to develop capabilities that make those centres want to work with Malaysia,\u201d he said.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Complement, don\u2019t compete<\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/cassette.sphdigital.com.sg\/image\/businesstimes\/847c56c20476abba43324e498e1caca1d6c6e9e3d6c7a9eda8b720e50ab1ba78\" alt=\"\"\/><figcaption class=\"wp-element-caption\">Forest City has been included within Iskandar Malaysia as a Special Financial Zone to enhance its competitiveness.&nbsp;PHOTO: FOREST CITY<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The bigger question is what Malaysia can offer when one of the world\u2019s most established financial hubs sits next door.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For Dr Wong, attempting to compete head-on makes little sense. \u201cSingapore is in a different league than us,\u201d he said, citing its advantages in global connectivity, liquidity, legal and regulatory certainty and reputation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cSo, forget about competition. Rather, think of complementarity,\u201d he added.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That could mean capturing smaller family offices attracted by Malaysia\u2019s lower costs and proximity to Singapore, drawing investment into Malaysian businesses, or attracting mid and back-office functions from Singapore-based operations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">PwC\u2019s Fung sees Malaysia\u2019s advantage extend beyond proximity to Singapore as it sits at the heart of ASEAN\u2019s wealth creation, connecting directly to founder-led businesses and family enterprises.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Beyond asset holding, wealthy families need platforms to separate family wealth from business operations and handle multi-generational succession, making a Single Family Office the natural outcome of this process, she added.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">She said Malaysia offers a practical environment for local families to institutionalise wealth near their operating assets, while giving regional families a secure, cost-efficient Asean base with strong market access and long-term stability.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Reference Link:- <a href=\"https:\/\/www.businesstimes.com.sg\/international\/asean\/malaysias-strongest-card-multi-hub-push-could-be-islamic-finance\" target=\"_blank\" rel=\"noopener\">https:\/\/www.businesstimes.com.sg\/international\/asean\/malaysias-strongest-card-multi-hub-push-could-be-islamic-finance<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The country is not short of financial-hub options; the challenge is making them come together South-east Asia is building a new generation of financial centres to draw global capital. The second instalment in our series examines Malaysia\u2019s multi-hub strategy. From Labuan\u2019s offshore financial jurisdiction off the coast of Sabah, to Kuala Lumpur\u2019s purpose-built Tun Razak [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":8639,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"aside","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[2],"tags":[23734,34090,34089,11208,34087,24186,34088,2906],"class_list":["post-36579","post","type-post","status-publish","format-aside","has-post-thumbnail","hentry","category-sample-category","tag-finance-2","tag-financial-hub-3","tag-interest-free","tag-investment-2","tag-islamic-finance-2","tag-malaysia-2","tag-muslim-majority-country","tag-trade-2","post_format-post-format-aside"],"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/gsrra.com\/index.php?rest_route=\/wp\/v2\/posts\/36579","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gsrra.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gsrra.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gsrra.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gsrra.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=36579"}],"version-history":[{"count":1,"href":"https:\/\/gsrra.com\/index.php?rest_route=\/wp\/v2\/posts\/36579\/revisions"}],"predecessor-version":[{"id":36580,"href":"https:\/\/gsrra.com\/index.php?rest_route=\/wp\/v2\/posts\/36579\/revisions\/36580"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gsrra.com\/index.php?rest_route=\/wp\/v2\/media\/8639"}],"wp:attachment":[{"href":"https:\/\/gsrra.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=36579"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gsrra.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=36579"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gsrra.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=36579"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}