Malaysia Unveils Shariah-compliant Labuan Blockchain hub Master Plan

By Jailani Hasan

KUALA LUMPUR, May 28 (Bernama) -- Finance Minister II Datuk Seri Amir Hamzah Azizan has unveiled the master plan for the world’s first Shariah-compliant blockchain hub (SBH) for the Labuan International Business and Financial Centre (Labuan IBFC). 

Amir Hamzah said that the global demand for Shariah-compliant investment products is estimated at US$3.8 trillion (US$1=RM4.69). 

As such, the potential of blockchain technology would significantly contribute to the Islamic economy, particularly in addressing the untapped market of the 1.9 billion Muslim community, he added.

"This master plan harnesses blockchain technology to enhance the Islamic digital economy, ensuring it meets the needs and values of the global Muslim community while positioning Malaysia as a global leader in Islamic digital finance," he said during the launch of the master plan in conjunction with the Global Forum on Islamic Economics and Finance (GFIEF) 2024 here. 

Meanwhile, Labuan Financial Services Authority (Labuan FSA) director-general Nik Mohamed Din Nik Musa said Labuan IBFC is set to become a forefront player in Islamic digital finance, providing cutting-edge decentralised application technology and smart contracts. 

He noted the Labuan SBH is poised to revolutionise the global Islamic finance landscape. 

“This initiative will catalyse progress, fostering engagement, connection, and collaboration among international financial technology (fintech) and digital technology providers to develop and offer innovative products and services, especially to the unserved and underserved market segments worldwide.

“These tax incentives will rejuvenate Labuan’s Islamic finance sector and complement Labuan FSA’s initiatives to enhance Islamic finance, aligning with Malaysia’s global leadership in Islamic finance as outlined in Malaysia's MADANI Economy Framework," said Nik Mohamed Din in a statement. 

According to the statement, the federal government has granted a five-year, zero per cent tax exemption starting from the 2024 assessment year for Labuan Islamic digital players to further bolster Labuan IBFC’s status as a hub for Islamic finance.

The regulator said the SBH master plan was developed by Labuan FSA with a vision to transform Labuan IBFC into a premier digital financial hub and a launchpad for blockchain technology.  

In line with Malaysia’s National Blockchain Roadmap 2021-2025, the initiative’s key features include, among others, creating a financial system that promotes social justice, economic stability and ethical behaviour according to the Shariah and employing smart contracts on the blockchain to automate and enforce contractual process for Islamic institutions within the Shariah parameters, it said.

The masterplan is an integral component of the Islamic Digital Asset Centre initiative launched in 2022 to attract digital assets and fintech players to Labuan and establish a niche in digital Islamic finance, it added. 

-- BERNAMA