abdul rasheed ghaffour : opening remarks - world halal business conference 2021 opening remarks by mr abdul rasheed ghaffour, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the world halal business conference 2021, 9 september 2021. * * * assalamualaikum w. b. t and a very good afternoon to our distinguished guests and fellow audience. thank you to the halal development corporation ( hdc ) for inviting me to deliver the opening remarks today. i wish to congratulate hdc for organising this conference which i believe will be inspiring and enlightening. the timing of this event could not be better, echoing the pace of an ongoing global economic recovery. the theme of this conference, “ halal – the catalyst for universal economic recovery ” spells out the potential for this multi - trillion dollar industry to facilitate the rejuvenation of the global economy. within the global sphere, the prospect of the halal economy is huge. global consumption of halal goods and services is expected to grow at 3. 5 % annually to reach usd2. 4 trillion by 20241, largely driven by the fast - growing muslim population. another contributing factor is the rising trend on ethical consumerism that primarily considers the impact of consumption. this aligns with the practice of halalan - toyyiban that propagates good, pure, and wholesome elements in consumption. at a broader level, this is also relevant in addressing growing concerns on sustainability and climate change in halal production. these global trends on halal economy present an excellent narrative with enormous prospects for malaysia, given our forefront position in the global halal economy. ranked top in both islamic finance and islamic economy, these trends open up opportunities to marry both of these segments2. our domestic halal market is currently valued at approximately rm300 billion, contributing 7 % of the country ’ s gdp. this figure is projected to grow further to rm400 billion, to account for 11 % of gdp by 20303. we have observed the increasing prominence of islamic financial institutions in supporting the halal sector in recent years. although only 21. 9 % of malaysian halal - certified companies used islamic finance in 2018, the number of applications from this segment has doubled to 10, 800 in 2020, amounting to rm63 billion4. allow me to share some thoughts on three critical factors that contribute to this positive trend, which i believe will continue

moving forward. first is the value proposition of islamic finance that extends the ability of islamic financial institutions to offer beyond bank - based credit intermediation. the universal scope of business under the islamic financial services act 2013 allows islamic financial institutions to mobilise different sources of funds towards delivering meaningful solutions. one example is the provision of value - added services to smes such as marketplace and advisory services in trade facilitation alongside supply chain finance capability. to date, five islamic banks are already offering such services through the hdc ’ s halal integrated platform. i understand that more are expected to join this digital platform later this year. another example is the investment account, an instrument which allows islamic banks to source risk - absorbent capital to fund high - growth halal business sectors such as pharmaceutical and cosmetics. the ability of islamic banks to structure investment account in accordance with the risk profile and characteristics of the underlying assets offers an attractive opportunity for customers to diversify their investment portfolio across various halal sub - sectors. second is the wide network of malaysian financial institutions in facilitating halal exports to tap into regional markets. increasing interest from asean countries which makes up 42 % of the global muslim population as well as demand from non - muslim dominated asian countries such 1 / 3 bis central bankers'speeches as japan, korea and vietnam provide a huge halal consumption base for domestic halal businesses to tap on. currently, three malaysian financial institutions have leveraged their extensive global network and strategic partnerships to assist halal exporters in gaining access to new markets. moving forward, malaysian financial institutions should take advantage of the strong government - to - government ( g2g ) ties and multilateral strategic cooperation in the halal sector between countries to offer islamic trade finance to halal industry players. the third factor is the ability of islamic financial institutions to facilitate businesses to transition towards more sustainable practices. the underlying concept of maqasid shariah which propagates for the attainment of benefits as well as preventing harm, resonates well with sustainability principles that call for a balanced, sustainable and inclusive economic growth. adopting sustainability practices is imperative to ensure the longevity of businesses. failure to take this into account may result in substantial financial loss to the halal industry given that our trade partners have started imposing expectations on sustainability as preconditions to transact. for example, malaysia ’ s top halal export markets ( e. g. china, singapore and japan ) are signatories to the net zero