Malaysia Urged to Lead Research and Innovation in Islamic Economy

 

Malaysia Urged to Lead Research and Innovation in Islamic Economy 

INCEIF University is advocating for Malaysia to become a global leader in Islamic economic research and innovation, emphasizing the development of a value-based, compassionate, and balanced system. This initiative was significantly bolstered by the launch of the Centre for Research and Innovation in Islamic Economics (i-RISE) on June 10, 2025, by Prime Minister Datuk Seri Anwar Ibrahim. The PM stressed the critical need for Islamic economics to prioritize good governance, clear policy frameworks, and tangible real-world impact, moving beyond mere halal compliance or anti-"riba" rhetoric. He called for addressing structural flaws in Muslim countries, particularly wealth leakage and corruption, arguing that "if we ignore governance, Islamic economics risks becoming hollow."

i-RISE, supported by the Islamic Economic Research and Innovation Fund (IERIF) with over RM12 million in funding, is designed to be a national and global platform for innovation, policy engagement, and multisectoral collaboration. It will focus on five key research pillars: equitable economy, environmental sustainability, monetary system effectiveness, Islamic finance, and the halal economy, ensuring research translates into practical societal impact. Anwar also highlighted the importance of integrating contemporary issues like AI, energy transition, and digital transformation into Islamic economic discourse, striving for an "inclusive, humane and future-ready economic system rooted in our moral and spiritual principles."

INCEIF University's President and Chief Executive Officer, Professor Emeritus Datuk Dr. Mohd Azmi Omar, stated that the country must develop a strong Islamic economic system based on values, compassion, and balance to ensure inclusive prosperity that benefits all members of society.

To support this call, he said the university established the Centre for Research and Innovation in Islamic Economics (i-RISE). According to Mohd Azmi, i-RISE aligns with the six Key Focus Areas of the Malaysia International Islamic Finance Centre (MIFC) Leadership Council, which prioritizes knowledge advancement, capacity building, and institutional development in Islamic finance.

"i-RISE also fulfills the mandate of MIFC Leadership Council (MLC) Impact Project 7, which calls for the establishment of an Islamic Economic Centre of Excellence, a collaborative effort between INCEIF University and the MLC," he said at the i-RISE launch event on Tuesday, June 10, 2025.

The establishment of the center is also a tangible outcome of INCEIF University and the MLC's initiative to create an academic research hub aimed at advancing the Islamic economy and connecting it more effectively with Islamic finance, as outlined in the MLC Position Paper 2024.

Prime Minister Datuk Seri Anwar Ibrahim, at the launch, highlighted the critical need for Islamic economics to prioritize good governance and real-world impact. He urged scholars and practitioners to re-center Islamic economics around good governance, clear policy frameworks, and tangible impact, instead of relying solely on halal compliance or anti-"riba" rhetoric. He further emphasized that Islamic economics must address structural flaws in Muslim countries, particularly those related to wealth leakage and systemic inefficiencies.

“Our countries are not poor. Poverty exists because of the abuse of power and endemic corruption. If we ignore governance, Islamic economics risks becoming hollow,” he said. He stressed that governance and macroeconomic policy should be treated as core pillars of Islamic economic thinking — not afterthoughts — and urged i-RISE to lead in this area.

“You can talk about trillion-dollar halal industries, but if we cannot even break into new markets or support Malaysian business interests, the numbers are meaningless,” he added. Anwar also noted that the halal sector must evolve beyond product certification to include active participation in global value chains and joint ventures. True sustainability in Islamic economics must reflect values of justice and compassion, rather than adopt surface-level environmental goals.

He called on scholars to integrate issues such as artificial intelligence (AI), energy transition, and digital transformation into the Islamic economic discourse, stating that these are no longer optional fields of study. “This is not just about Islamic versus conventional finance. We need to build an inclusive, humane and future-ready economic system rooted in our moral and spiritual principles,” he said. He also urged the International Centre for Education in Islamic Finance (INCEIF) and i-RISE to position themselves as drivers of both national strategy and global Islamic economic leadership.

A key driver behind i-RISE is the Islamic Economic Research and Innovation Fund (IERIF), a strategic initiative under the 2024 and 2025 Budgets. To date, the Ministry of Finance has channeled over RM12 million under IERIF to support high-impact research and academic projects, beginning from micro-takaful solutions for underserved communities to ethical labor market reforms.

Mohd Azmi said that i-RISE, through IERIF, fosters a collaborative research ecosystem involving scholars from within Malaysia and abroad, collaborating with industry as well as involving practitioners and regulators.

"We are creating a national platform to advance high-impact research and produce policy-oriented and practice-based outputs – research that doesn't just sit on a shelf, but has a real impact on lives," he said.

He added that a total of 54 projects have been approved under IERIF so far. To ensure coherence and strategic direction, Mohd Azmi said i-RISE is anchored on five key research pillars namely equitable economy, environmental sustainability, effectiveness of monetary systems and policies, Islamic finance, and the halal economy.

"These pillars guide how we allocate IERIF, not merely as funding, but as a national research platform with defined priorities, real outcomes, and measurable results. It is a moral question we must answer," said Mohd Azmi.

With its launch, i-RISE joins two other centers of excellence under the ISRA Institute – the Centre of Excellence for Islamic Social Finance (CoEISF) and the Centre of Excellence for Applied Shariah in Economics and Finance (CASHiEF) – in leading pioneering research and policy-based work in Islamic economics and finance.

The forum, "Reshaping the Future: Islamic Economics for a Humane and Sustainable World," hosted by INCEIF University and its research arm, ISRA Institute, at Sasana Kijang, Bank Negara Malaysia, gathered prominent policymakers, regulators, scholars, and industry leaders with a shared mission to promote a values-based economic paradigm rooted in ethics, justice, and sustainability—principles aligned with the maqasid al-Shariah. A high-level Fireside Chat titled "Empowering Society Through Humane Economics: A Multisectoral Commitment and Role" also took place, featuring panellists Tan Sri Azman Mokhtar, Mr Adnan Zaylani Mohamad Zahid, and Tan Sri Abdul Wahid Omar, moderated by Professor Emeritus Dato’ Dr Azmi Omar. Dr Marjan Muhammad, Deputy President Research of ISRA Institute, INCEIF University, stated that "i-RISE embodies our commitment to a values-driven economic model that uplifts human dignity and advances shared prosperity." The event concluded with an exhibition showcasing IERIF-funded research projects.