According to Fitch Ratings, the Islamic finance industry in the ASEAN region is projected to exceed $1 trillion by the end of 2026, having already reached nearly $950 billion by mid-2025. This growth will be led by Malaysia, Indonesia, and Brunei, which have large Muslim populations, supportive regulations, and strong access to sukuk (Islamic bonds).
However, the demand for Islamic finance is not consistent across all ASEAN countries. It has a limited presence in Singapore, the Philippines, and Thailand and remains underdeveloped in Vietnam, Laos, Cambodia, and Myanmar due to smaller Muslim populations and a lack of regulatory support.
The report also highlights key market figures:
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Malaysia is the largest Islamic banking market in the region, with around $300 billion in assets. Islamic financing makes up 42% of its total system financing.
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Indonesia’s Islamic banking assets totaled $56 billion in the first four months of 2025, accounting for 7% of its banking system’s total assets.
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Malaysia and Indonesia dominate the regional sukuk market, contributing to almost all of the $475 billion in outstanding sukuk by mid-2025. These two countries represent 47% of the global sukuk market.
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Brunei’s Islamic banks held close to $10 billion in assets at the end of 2024, making up 63% of its total banking assets.
The report suggests that greater financial system connectivity within ASEAN could help boost the penetration of Islamic finance throughout the region.
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