Why Malaysia should convene, not just contribute to, Brics and Islamic finance — Ashurov Sharofiddin and Mohd Zaidi Md Zabri

On September 23, Malaysian Prime Minister Anwar Ibrahim’s visit to India took an unexpected turn. While the 18th Brics Leaders’ Summit dominated the headlines, a less visually appealing yet potentially transformative conversation emerged. The summit saw Ibrahim emphasizing Islamic capital markets as a key area for Malaysia’s collaboration with Brics nations, alongside trade diversification, semiconductors, and artificial intelligence.

However, the conversation remained one-sided, focusing on what Malaysia could offer rather than fostering a reciprocal exchange.

A significant gap exists within Brics economies with halal sectors, particularly concerning halal small and medium enterprises (SMEs). These businesses often face difficulties accessing formal credit due to the unconventional nature of their assets and working capital cycles. Islamic banking and trade finance products, such as commodity murabahah and musharakah-based working capital, offer promising solutions.

However, the lack of cross-border standards poses a substantial obstacle. Malaysia's SME Bank has already implemented some of these solutions, but a standardized, cross-border framework remains absent.

For Malaysia to truly leverage its Brics partnership, it should transition from a vendor role to a convener. By hosting a Brics Halal SME Finance Working Group, Malaysia can facilitate a comparative exchange of best practices, data privacy concerns, and regulatory standards. This move would position Malaysia as a facilitator rather than a sole provider of expertise, fostering genuine collaboration and innovation.

The success of such a group hinges on its ability to navigate the unique challenges posed by diverse Brics regulatory environments, ultimately leading to a shared understanding and implementation of halal SME financing frameworks across the region.