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Home / Insights

Featured Insights

Islamic Finance

Can blockchain redeem global finance?

17 Jun 2025
Insight

Islamic Finance
Creating impact through future-first investments 
16 Jun 2025
Insight

Islamic Lifestyle
The untapped potential of Muslim-friendly adventure tourism
04 Jun 2025
Insight

Islamic Finance
IsDB prize laureate on how his initiative will tackle Indonesia's waqf challenges
01 Jun 2025
Insight

Islamic Lifestyle
How AI is finding its way into regional academia  
28 May 2025
Insight

Islamic Finance
How AI is powering the future of the Islamic economy
30 Apr 2025
Insight


All Other Insights
Islamic Finance
Can blockchain redeem global finance?

It’s easy to say people have lost faith in the financial system. But what does that actually look like?

It looks like savings shrinking under inflation while banks post record profits. It looks like being denied a loan despite working two jobs. It’s paying years of insurance premiums, only to be told your claim doesn’t qualify when tragedy strikes.

In countries around the world, trust in financial institutions is eroding. A 2023 global survey by Edelman found that fewer than 50% of people trust banks to do what’s right and that figure drops even further among Gen Z and millennials.

These generations have watched bailouts flow to the powerful, while ordinary families are left with overdraft fees and frozen accounts. They’ve grown wary — not just of banks, but of systems that profit from complexity and exclusion.

But maybe the problem isn’t people. Maybe it’s the system itself.

When systems are built on asymmetry
Most financial structures were designed to be top-down. You deposit your money and trust that the institution will handle it ethically. But time and again, that trust has been tested and often broken.

And for Muslims, that breakdown goes deeper. Even in Muslim-majority countries, many financial offerings labeled ‘“Islamic’” still feel like conventional products wrapped in Shariah marketing.

According to a 2022 study by the International Shariah Research Academy (ISRA), over 70% of Islamic financial institutions engage in dual models that may not align fully with ethical or faith-based expectations.

What’s missing isn’t just trust. It’s transparency, participation, and real-world alignment. That’s where blockchain and more specifically, decentralized autonomous organizations (DAOs) present a potential shift.

Understanding blockchain and DAOs minus the hype
A blockchain is a digital ledger that records transactions publicly and immutably. Once data is added, it can’t be changed. Everyone can see what’s happening, but no one can alter it behind closed doors.

DAOs build on that infrastructure. A DAO isn’t a company or an app. It’s a collectively governed organization that runs on code, not executives. Rules are written into smart contracts that automatically execute decisions based on the consensus of its members. Voting is open. Funds are traceable. No individual holds the keys.

This model challenges the very foundation of how most financial systems work and offers a new blueprint.

When technology reflects timeless values
For Muslims, this isn’t a foreign idea. Shura (consultation), waqf (endowment), and the ummah (community) have long served as frameworks for mutual aid and collective governance.

In early Islamic history, financial structures weren’t built to extract profit from the many, they were designed to circulate wealth fairly, fund public good, and preserve human dignity.

The Bayt al-Mal (public treasury), managed with community oversight, distributed resources to widows, orphans, and the poor. Waqf systems funded schools and hospitals across the Muslim world for centuries.

DAOs don’t replicate these frameworks perfectly but they echo the same spirit. They offer a path forward that’s less about disruption and more about restoration.

Intentional innovation is what matters
Some critics dismiss blockchain as overhyped or too technical. Others fear it will replicate the very power imbalances it claims to dismantle. And they’re right to be cautious. Technology is neutral, it reflects the intent of the people using it.

When guided by ethics and inclusion, blockchain can become a powerful tool for rebuilding trust.

Consider The LifeDAO (TLD). It’s not the only example and it shouldn’t be the focal point but it does offer a working case. TLD operates as a DAO to provide financial protection without traditional insurance structures.

Members voluntarily contribute to a communal fund, and when one passes away, their nominee receives a direct payout, without gatekeeping, delays, or profit motives.

Everything from fund governance to decision-making happens transparently, guided by consultation (shura) rather than executive fiat. It’s a financial tool that feels more like a community than a corporation.

Elsewhere, DAOs are funding regenerative agriculture, supporting decentralized journalism, and offering peer-powered alternatives to health insurance. The point isn’t to romanticize the tech but to spotlight a growing movement of people using it to build systems that serve, not extract.

What stands in the way
Of course, this model isn’t without its challenges.

According to the World Economic Forum (2023), more than 60% of adults globally lack the digital skills needed to securely use blockchain tools. There are also legal gray areas: DAOs remain unregulated in many jurisdictions, making it harder to enforce agreements or protect contributors from fraud.

But these aren’t reasons to dismiss the model. They’re reminders that the work ahead is real and necessary. Building ethical alternatives takes more than smart contracts. It requires community trust, governance education, and a willingness to prioritize long-term resilience over short-term returns.

The real question isn’t “Can it work?”
It’s whether we have the courage to build financial systems that reflect the values we say we believe in.

If blockchain is just another way to hoard, hide, or hustle then we’ve learned nothing. But if it becomes a tool to redistribute trust, decentralize power, and amplify shared responsibility, then we may be witnessing not a technological revolution, but a moral one.

So the question isn't whether blockchain can redeem global finance.

It’s whether we’re ready to redeem it by showing up, shaping it, and making sure it doesn’t leave our communities behind.

Because in the end, faith in finance won’t be restored through slogans. It’ll be rebuilt through systems people can see, trust, and shape together — one block, one voice, and one shared decision at a time.

Sharene Lee is chief operating officer & co-founder of Takadao

17 Jun 2025
Insight
Islamic Finance
Creating impact through future-first investments 

Impact investing is inherently forward-looking, offering a viable alternative to ESG investing

 

Criticism of pursuing ESG (environmental, social and governance) goals can be broadly condensed into two points. 

The first disapproval refers to the companies’ broader intent to generate profits without the distraction of ESG goals. 

Businesses are typically built to generate profits with little to no thought given to how low wages, overrun production lines, and subpar product quality often create negative social and environmental effects. On the flipside, recalibrating a company’s supply chain will yield higher costs, which prompts a debate on how much intent and effort must be reserved for ESG goals. 

The second challenge is the difficulty of calibrating the true impact of pursuing ESG goals. It is relatively easier to assess a firm’s performance through financial metrics, such as ROI, EBITDA, EPS, etc. Due to their qualitative nature, measuring the impact of ESG is difficult. 

The problems surrounding these two ESG challenges undermine a company’s resolve to pursue green goals. Shareholders can be convinced of fulfilling long-haul ESG goals, but they seek positive and preferably high returns in the short term. 

For all the odds, the ESG industry continues to grow. Nearly 9 out of 10 investors, who participated in a Bloomberg study, suggested that ESG leads to better returns, resilient portfolios and enhanced fundamental analysis. Ongoing pressure on companies to consider ESG initiatives is certainly leaving an impact on investors and corporations framing their commercial decisions. 

Yet there remains the risk of greenwashing, with companies feigning environmental consciousness to bolster credibility. Deutsche Bank’s asset manager DWS was fined €25 million earlier this year for “aggressive” advertising that “did not reflect reality”. 

This is not an isolated event, with several multi-national companies such as Nestle, Shell, Starbucks and Apple accused of similar transgressions. Often companies misrepresent their eco-friendly goals to generate demand. 

Indeed, most companies that embed ESG in their strategic decision-making were established on the pillars of profit maximization. This means that healthy bottom lines will be the touchstone of all commercial decisions.

For vocal thinkers such as Milton Friedman, the social responsibility of businesses is to increase profits, leaving ESG considerations to regulation. So long as companies are following the law of the land, claims Friedman, there is no need for them to consider this extraneous factor.  

Of course, the downside is that companies will look to circumvent laws to achieve what they wish to, not what they should. Intent, therefore, is key, which calls for an overhaul in a company’s approach. Environmental considerations must be embedded into a firm’s mission statement, diluting the notion of prioritizing financial returns as a core objective of ESG investing.

Viable alternative
Impact Investment represents a viable alternative to ESG, with the former aiming to achieve positive social good whilst generating financial returns. Rather than isolated activities such as planting a score of trees on abandoned land, impact investment conflates social good with the need to generate returns.

A good example would be investing in companies that manufacture smartphones but those that do not extract metals from conflict zones. Impact investment is inherently forward-looking. 

Impact Investment also maintains a strong focus on measurability, with enterprises measured on financial returns and the impact created. Unlike ESG where goals are subjugated to financial returns, impact investment looks to an initiative’s end goal.

It may be less attractive to investors as an asset class, but its focus on long-term outcomes does combat the short-termism of conventional capitalism, and falls in lockstep with holistic principles of Islamic finance. 

Rizwan Rahman is a UK trained lawyer based in Doha

16 Jun 2025
Insight
Islamic Lifestyle
The untapped potential of Muslim-friendly adventure tourism

Adventure tourism is fast emerging as a powerhouse in the global travel industry.

Driven by a growing appetite for authentic, experiential journeys, the market is expected to grow from $896 billion in 2025 to nearly $1.6 trillion by 2032, according to Fortune Business Insights.

Within this rapidly evolving sector, one promising yet underexplored demographic stands out: Muslim travelers. As they increasingly seek immersive, adrenaline-fueled experiences that align with their faith and values, destinations and travel providers are beginning to take notice.

According to the State of the Global Islamic Economy Report 2023/24 by DinarStandard, Muslim travelers spent $133 billion globally in 2022 - a 17% jump from the previous year. This figure is expected to climb to $174 billion by 2027, growing at a CAGR of 5.5%.

Reimagining halal travel

What was once a niche space focused on halal food and prayer spaces, is evolving into a more adventurous, immersive offering - and some trailblazers are already leading the way.

For instance, Denmark-based Albatros Expeditions is planning to launch the world’s first halal-certified cruise to Antarctica in 2026. Meals will be prepared in a halal-certified kitchen, no pork or alcohol will be served onboard, and the ship’s sauna will include ladies-only hours.

“Over the past decade, we’ve seen a noticeable shift in the preferences of Muslim travelers,” Dinçer Özkaya, general manager of SalamBooking, a global marketplace for Muslim-friendly travel tells Salaam Gateway. 

“While traditional halal travel - focused on comfort, convenience, and religious compliance - still forms the core of the market, a growing segment of travelers, especially younger generations, are now seeking more experiential and adventure-driven journeys.”

To meet this demand, SalamBooking is designing experiences such as hiking in Bosnia, horseback riding in Cappadocia, and eco-safaris in Africa - all designed to be halal-conscious.

“Muslim travelers today are seeking more than just adrenaline or sightseeing - they want purposeful adventures that align with their lifestyle and faith,” says Özkaya.

“As a platform, we’ve learned that Muslim adventure travelers don’t want to compromise between thrill and faith - and they shouldn’t have to. Their expectations are about integration: being able to experience the world fully while staying true to who they are.”

New destinations, new horizons

While traditional Muslim-friendly destinations such as Turkey, Egypt, and Andalusia continue to attract travelers with their combination of Islamic heritage, infrastructure, and natural beauty, SalamBooking is also seeing growth in emerging adventure hotspots.

“Our core markets - including Turkey, the Balkans, Andalusia, Egypt, and parts of Europe -continue to grow steadily due to their strong Islamic heritage, developed infrastructure, and natural appeal. These regions strike a perfect balance between cultural depth, outdoor activities, and halal compliance, making them ideal for families and experience-seeking travelers alike,” says Özkaya.

He adds that demand is growing across Far East and Southeast Asian countries, particularly Malaysia, Japan, South Korea, and Indonesia — places that are investing in halal tourism infrastructure and offering eco-adventures and wellness retreats tailored to the next generation of Muslim travelers.

“We're developing curated experiences in Malaysia’s tropical rainforests, South Korea’s mountainous national parks, Japan’s cultural countryside, and even combined Umrah + nature retreats in Saudi Arabia - all while ensuring they meet the expectations of our audience.”

Malaysia has taken a leading role by introducing official certifications such as the Muslim-friendly tourism and hospitality assurance and recognition (MFAR) in 2020 and the Muslim-friendly tour guide (MFTG) program in 2017, which now spans nine states.

“Both MFAR and MFTG play a vital role in gaining the trust and confidence of Muslim travelers, as these initiatives maximise their experience in Malaysia and allow them to take advantage of its cultural, natural, and other attractions,” says Arif Hakimi bin Mat Yusuf, tourism officer at Malaysia Tourism Promotion Board.

While MFAR was originally established as a standard for Muslim-friendly accommodation, the program has since expanded its scope to encompass spas and wellness centers, travel agencies, transportation hubs, shopping malls, amusement parks, rest areas, tourism products, and convention centers, according to Hakimi.

Bridging the gaps

For all its progress, the Muslim-friendly adventure segment faces key challenges. “Finding local guides, accommodation, and transport that align with our values isn’t always easy, especially in remote regions,” Amira Patel, founder of adventure Group The Wanderlust Women tells Salaam Gateway. 

Özkaya points to a broader gap in industry awareness. “Many local operators, accommodations, and guides still lack an understanding of Muslim travelers’ specific needs - from halal food and prayer facilities to modesty considerations and cultural sensitivities, making it harder for Muslim travelers to fully trust new destinations.”

“Sometimes people don’t understand why a group of Muslim women want to climb a mountain or travel alone. But with time, patience, and community-building, we work to shift that perspective,” adds Patel. 
 
Another hurdle is the lack of global halal certification standards for adventure tourism -something that Özkaya say contributes to fragmentation and confusion. 

He notes the path forward lies in equipping suppliers with the right tools and mindset. “The biggest untapped opportunities now lie in building inclusive awareness and training programs for suppliers worldwide, expanding faith-integrated wellness, eco-tourism, and adventure Umrah extensions, and developing new destinations in Africa, Central Asia, and South America with tailored Muslim-friendly services.”

04 Jun 2025
Insight
Islamic Finance
IsDB prize laureate on how his initiative will tackle Indonesia's waqf challenges

Medikids, a healthcare initative - co-founded by Afdhal Aliasar, an Islamic economy and finance practitioner - secured the 2025 Islamic Development Bank (IsDB) Prize for Impactful Achievement in Islamic Economics.

Medikids was awarded for its waqf initiative in Indonesia, which deploys dental clinics for families to yield sustainable funding for waqf assets and social welfare initiatives.

We speak with the IsDB prize laureate on his vision, the initiative's community engagement and scalability.  

What governance safeguards are in place to ensure Medikids' waqf assets are protected and professionally managed over the long term?

Each clinic that is designated as a waqf asset is a distinct legal entity that is administered in compliance with the government's applicable business regulations and overseen by The Waqf Agency of Indonesia. The capital of this business entity is comprised of waqf funds.

The "waqf operator" function is a professional business actor who has demonstrated their trustworthiness and ability to manage the operations of a dental clinic, which is of paramount importance in the operation of this clinic.

Image: Supplied

MHDC Group, the appointed operator waqf, has a wealth of experience administering the operations of over 30 clinics throughout Indonesia, spanning over 15 years.

Can you describe your approach to community engagement - both in sourcing waqf donations and in reaching underserved patients?

Initially, the waqf fund was primarily sourced from the founders, as well as the doctors who work in all of our clinic networks and other community members who support this program.

The funds are continuing to increase in tandem with the accelerated rise in net profit from the existing clinics. The waqf foundation has collaboration programs with numerous parties, particularly health campuses throughout Indonesia, to conduct social service activities in a variety of locations in order to distribute to the dhuafa patients in need.

We also offer dental treatment to individuals in need at our clinic locations and encourage children to visit the clinic for educational and enjoyable field excursions to learn about dental health.

Have digital tools (e-dentistry, fintech platforms, blockchain-based waqf registries etc.) played a role in scaling or de-risking your model?

The dissemination of clinical information and news has become a prevalent practice through the use of social media on the internet. We deployed digital tools in the initial stages of incorporating social crowdfunding platforms to broaden the pool of donors who wish to partake in this initiative.

We intend to issue Wakaf Sukuk with a social health theme through the Indonesia Stock Exchange in the future.

We are of the opinion that the role of digital platforms will be more significant when we offer social investments through trusted channels that are indeed based on the performance of social activities that have been running well and continue to develop.

Of course, we place a high value on the trust of the waqf, which is motivated by the desire to achieve results that have a positive and sustainable impact on society and the community.

In what ways could your model be replicated or franchised in other Muslim-majority contexts with varying healthcare infrastructures?

It is highly probable that this program will be further developed in numerous locations worldwide, particularly in other Muslim countries, in accordance with the concept of waqf. The demand for high-quality healthcare services is significantly increased in accordance with the economic development of society.

The key to success will be the concept of a productive and independent waqf that can finance the operations of the waqf assets themselves.

We are highly amenable to the prospect of forming partnerships with other organizations in order to establish a sustainable and productive social movement.

 

01 Jun 2025
Insight
Islamic Lifestyle
How AI is finding its way into regional academia  

Artificial intelligence has seized popular imagination like no technology in recent memory. From smart translators and virtual assistants to content generations tools and chatbots – AI in its varying forms and applications has taken centre stage. Countries and institutions are scrambling to secure the required infrastructure and the paraphernalia to capitalize on the technology and its apparent benefits. 

While AI and other frontier technologies are seeking to redefine the rules of value, this presents a real-world challenge: an asymmetry between the present education system and the tech labour market.  

AI will affect almost 40 percent of jobs around the world, according to the International Monetary Fund. This calls for a revisit of the current academic structure, in a manner consistent with the scale of transformation expected in the years ahead. Countries across the six-member Gulf Cooperation Council (GCC) bloc seem to be doing just that. 

The UAE has mandated AI education to be integrated into the public-school curriculum, for children as young as kindergarten pupils up to teenagers in Grade 12. The AI curriculum will cover foundational concepts, data and algorithms, ethical awareness, real-world applications, innovation and project design, among others. 

“Mandating AI learning in schools can play a significant role in preparing students for a future where AI-related skills are expected to be in high demand,” Hameed Noor Mohamed, managing director, Alpen Capital tells Salaam Gateway.

“Beyond providing foundational knowledge of a critical technology, it also helps develop essential competencies such as analytical thinking, problem-solving, and digital literacy.” 

Neighbouring Saudi Arabia has also launched an AI high school course, targeting over 50,000 12th-grade students in its initial phase. One-fifth of internet users in the kingdom actively use various AI apps, with youth between the ages of 20 and 29 most engaged with these tools, the Saudi Internet 2024 report revealed. 

Qatar is prioritizing AI integration in the education sector with the curricula being updated with AI foundations. Bahrain, too, has plans to expand the scope of AI teaching, as detailed in the ministry’s education strategy for 2023–2026. 

“The Fourth Industrial Revolution is reaching the Gulf’s shores,” Alex Rattray, managing director – Middle East at North Highland, writes in a LinkedIn post. 

“All these forces – youth demographics, women’s empowerment, diversification, digitisation, and decarbonisation – converge into one reality: the jobs of the future GCC will require vastly different skills. A knowledge economy cannot thrive on yesterday’s skillsets.”

AI is expected to contribute $320 billion to the Middle East by 2030, with Saudi Arabia and the UAE billed as the biggest beneficiaries, according to PwC. AI is expected to contribute over $135.2 billion to the Saudi economy in 2030 - equivalent to 12.4% of its GDP. In relative terms, the UAE is expected to see the largest impact of close to 14% of 2030 GDP.  

“As GCC countries invest in AI technology, there is a need for a generation of skilled technicians to drive the industry in the region. School is the time for learning about technology, its uses and applications, its risks and challenges, but it is also a time to learn how to interact with the AI tools available to students in a way that benefits their learning and their future readiness,” Roland Hancock, Education and Skills Lead, Partner at PwC Middle East tells Salaam Gateway. 

“AI skills development needs to go further if the GCC is to make the most of its investment. Modular, practical and constantly evolving training is required to give future AI engineers the skills to be able to drive the sector. This will come at university and college level, as well as in lifelong learning.”

Overcoming challenges
Akin to all new developments and technologies, AI, especially in the world of academia, comes with its own set of obstacles. The biggest challenge facing schools, cautions Hancock, is keeping pace.

“AI is advancing so rapidly that developing and maintaining relevant educational content and training can be a moving target for schools and educators. Across the world, institutions are grappling with how to design AI programmes that stay current and accessible. The GCC is no exception.”

Sustained investment in teacher training, curriculum innovation, and public-private partnerships (PPPs), Hancock states, will be critical to ensuring educators are equipped to deliver AI education that is timely, relevant, and impactful.

According to Alpen Capital’s Mohamed, one of the primary challenges in imparting AI education is the investment required to build the necessary infrastructure and digital ecosystem. 

“The availability of reliable technology providers to upgrade existing systems and deliver effective staff training adds another layer of complexity to the cost of implementation.” 

“The GCC education sector already faces a shortage of skilled teachers. Finding tech-savvy educators who are comfortable with AI-driven tools and capable of integrating them meaningfully into the curriculum, presents an additional hurdle.” 

28 May 2025
Insight
OIC Economies
Can Indonesia’s new wealth fund lift or sink its economy?

In February 2025, Indonesia launched Danantara, a sovereign wealth fund tasked with managing $900 billion in state-owned enterprise (SOE) assets to propel economic growth.

Amid a turbulent economic landscape - marked by a weakening rupiah, a contracting equity markets space, and waning investor confidence - Danantara represents a bold bet on transforming Indonesia’s economy. 

Indonesian president Prabowo Subianto envisions it as a driver of propelling GDP growth from 5% to 8% by 2029, emulating giants like Singapore’s Temasek. Yet, public skepticism warns of governance risks and parallels to Malaysia’s 1MDB scandal. 

Potential to elevate Indonesia
Danantara’s ambitious scope - consolidating 65 SOEs, starting with seven giants like Bank Mandiri and Pertamina - offers a pathway to address Indonesia’s economic turbulence. By streamlining SOE operations, it could boost efficiency, reduce fiscal burdens, and unlock $20 billion in initial funding for high-impact sectors like infrastructure, renewable energy, and nickel downstreaming.

These investments could attract foreign direct investment (FDI), which is critical as investor confidence falters (e.g., LG Energy Solution’s $8.5 billion EV project withdrawal). 

If successful, Danantara could mirror Temasek’s role in Singapore, where state-led investments drive 5-6% annual GDP growth. For Indonesia, this could stabilize the rupiah, battered by global commodity price swings, and restore market momentum.

Beyond growth, the wealth fund could empower Indonesia to retain more economic value, addressing a longstanding issue for OIC nations often exploited by global corporations for low-value production. By investing in downstream industries like nickel processing, it could shift the country from raw material exporter to high-value producer, boosting national wealth. 

Its global advisory board, including billionaire and hedge fund manager Ray Dalio, signals intent to court international capital, positioning Indonesia as a regional economic powerhouse.

Risks that could compound challenges 
Danantara’s governance structure is a glaring concern, threatening to amplify Indonesia’s economic challenges. Unlike Temasek’s independent board, Danantara’s leadership raises fears of cronyism. National auditors (BPK, KPK) lack direct oversight, requiring House approval to probe finances. 

The appointment of Thaksin Shinawatra, Thailand’s former prime minister ousted in a 2006 coup and dogged by corruption allegations, to the advisory board further erodes credibility, calling Danantara’s integrity into question. This move risks alienating investors already wary after the Jakarta index responded negatively on the fund’s launch day.  

Weak governance could exacerbate currency volatility and capital flight, as seen in recent market trends. If Danantara bails out underperforming SOEs without reforms, it risks draining public funds - $325 trillion IDR from budget cuts is already committed. A 1MDB-like scandal, where political influence led to a $4.5 billion loss, could deepen the rupiah’s slide and deter FDI.

The Business Judgment Rule, shielding officials from liability, and optional supervisory committees heighten moral hazard, potentially turning Danantara into a political slush fund rather than an economic stabilizer.

Malaysia’s tale of triumph and tragedy
Malaysia, an OIC peer with a commodity-driven economy, offers a dual perspective on state-led investment through Khazanah Nasional Berhad and the 1MDB scandal - models of success and failure for Danantara to heed.

Khazanah, established in 1993, manages $40 billion in assets and has driven Malaysia’s economic growth (e.g., 5.6% GDP growth in 2022) by professionalizing SOE management and investing in technology and healthcare.

Unlike Danantara’s politically driven structure, Khazanah’s independent audits and professional board have attracted FDI, stabilizing Malaysia’s economy during commodity volatility. Its disciplined approach to high-return projects offers a roadmap for Danantara to boost Indonesia’s markets and rupiah. 

However, Khazanah’s early missteps, like bailing out Malaysia Airlines, warn Danantara against propping up inefficient SOEs without reforms, which could strain Indonesia’s budget amid 2025’s turbulence.

On the other hand, The 1MDB scandal, where $4.5 billion was siphoned off through corruption starting in 2009, underscores the perils of weak governance. Controlled by then-premier Najib Razak, 1MDB lacked independent oversight, leading to massive debt and a weakened ringgit. 
Thaksin Shinawatra’s advisory role in Danantara echoes 1MDB’s political entanglements, amplifying fears of elite capture.

To avoid 1MDB’s fate, Danantara must enforce rigorous audits and insulate its board from controversial figures, ensuring funds fuel growth, not enrichment.

Malaysia’s contrasting experiences highlight a clear lesson: professional governance is critical to economic success. Khazanah’s transparency offers Danantara a path to stabilize Indonesia’s economy, while 1MDB’s collapse warns of the catastrophic risks posed by political interference, which could deepen Indonesia’s currency and confidence crises.

High-stakes gamble
Danantara stands at a crossroads. If it adopts Khazanah’s professional governance and strategic focus, it could elevate Indonesia’s economy, stabilizing markets and attracting FDI to counter 2025’s turbulence. 

However, governance flaws - political leadership, Thaksin’s scandal-tainted appointment, and weak oversight - risk a 1MDB-like disaster, deepening currency woes and investor distrust. 

To succeed, Danantara needs transparent audits, a professional board free of controversial figures, and clear investment criteria, insulated from cronyism. 

As Indonesia navigates global headwinds, Danantara’s execution will determine whether it becomes a beacon of growth or a costly misstep. Policymakers must heed OIC lessons to ensure it lifts, not sinks, the nation’s prospects.
 

Rianovel Mere is a consultant and project manager at DinarStandard

06 May 2025
Insight
Islamic Finance
How AI is powering the future of the Islamic economy

Artificial intelligence (AI) is rapidly emerging as a transformative force within the Islamic economy, driving innovation across sectors from finance and food to tourism and education. 

By enhancing Shariah compliance, improving accessibility, and enabling personalized services, the technology is reshaping how the Islamic economy operates, while preserving its ethical foundations.

More broadly, the technology’s potential economic impact is substantial - AI could contribute up to $320 billion to the Middle East's economy by 2030, according to PwC.  

“The synergy between AI and the Islamic economy is immense,” says Badr Saidi, quality manager and technical auditor at Halal Consulting S.L., a Spain-based halal certification body.  

“By leveraging AI in areas like Shariah compliance, ethical finance, halal supply chains, smart cities, tourism, and education, we can drive sustainable growth while staying true to Islamic ethical principles.”

To succeed, Saidi emphasizes the need for collaboration between AI developers, Islamic scholars, and industry leaders to ensure technological advances align with religious values.

Transforming Islamic finance

AI’s most visible impact is unfolding in Islamic finance, where it is streamlining compliance processes, improving fraud detection, and fostering financial inclusion.

“With AI, Islamic banks and financial companies can better understand their customers - how they invest, what they need, and even their risk tolerance,” says Sara Husain Hammad, innovation and technology project manager at Bahrain-based General Council for Islamic Banks and Financial Institutions (CIBAFI). 

“This helps create personalized financial products that comply with Islamic guidelines while still being innovative,” she says.

AI-powered tools are already transforming traditional processes. According to Saidi, machine learning algorithms are now automating the verification of financial transactions to ensure they adhere to Shariah law, avoiding elements such as Riba (interest), Gharar (excessive uncertainty), and prohibited investments.

He adds that AI-driven robo-advisors are also curating tailored halal investment portfolios, while predictive analytics are optimizing Sukuk (Islamic bonds) issuance and improving fraud detection in Takaful (Islamic insurance).

Banks across the Muslim world are already deploying AI. Dubai Islamic Bank (DIB) is using AI tools to assess the Shariah compliance of companies and financial instruments. Bahrain Islamic Bank has launched a digital platform offering access to more than 1,800 Shariah rulings to help simplify complex regulations and encourage industry collaboration. 

Outside of the GCC, Bank Muamalat Malaysia has partnered with Google Cloud to to deploy generative AI and advanced data analytics to help it evolve into a fully digital Islamic institution. Egypt’s Faisal Islamic Bank has embraced AI to modernize and expand its services.

AI is also helping extend financial services to underserved communities. By analyzing alternative data - such as mobile payment history and social behaviour - AI can help individuals with limited credit histories, including those in rural areas or small business owners, to qualify for financing. This supports Islamic finance’s mission of ethical and inclusive banking.

“Combined with Islamic finance’s focus on ethical and community-centered banking, AI can open doors for more people to access financial services in a way that respects their beliefs,” says CIBAFI ‘s Hammad.

Securing the halal supply chain

Beyond finance, AI is shoring up the halal economy by ensuring product traceability, authenticity, and safety. One of the biggest challenges in halal certification is verifying that ingredients and production processes comply with Islamic dietary laws. 

“AI can assist in several ways, including in ingredient label analysis. AI-powered Natural Language Processing (NLP) can scan product ingredient lists and detect potential non-halal components like gelatin, alcohol, or animal-based enzymes,” says Saidi.

AI-powered blockchain platforms now provide end-to-end tracking of halal products, from source to shelf, while computer vision systems monitor production lines for contamination, he adds. Image recognition tools are detecting fraudulent halal logos, and IoT sensors help safeguard halal-certified goods during transportation and storage.

AI is also playing a crucial role in laboratory testing. Advanced spectroscopy and chemical analysis, supported by AI, can identify traces of non-halal substances in food, cosmetics, and pharmaceuticals with high accuracy. Meanwhile, AI-driven analytics are helping businesses forecast demand for halal products, ensuring better inventory management and reduced waste.

However, standardization remains a challenge. According to Saidi, differing certification criteria across countries make it difficult to create a universal AI model, and smaller enterprises may struggle with the costs of adopting these technologies.

Enhancing Muslim-friendly travel

The Muslim-friendly travel market is another area where AI is making strides. According to the State of the Global Islamic Economy Report 2023/24, AI is enabling personalized travel experiences and improving customer service with virtual assistants and predictive analytics.

“Platforms can now generate customized itineraries for Muslim travelers, factoring in prayer times, halal food, nearby mosques, and Muslim-friendly accommodations,” says Saidi.

The Saudi Tourism Authority is pioneering AI-powered services, having recently launched "Sara," a virtual tour guide offering real-time travel advice. The authority has also partnered with Visa to create a Tourism Data Lab to analyze visitor behaviour and spending trends.

Facilitating Islamic education

AI’s role in Islamic education is growing rapidly. NLP models can help scholars and students in deepening their understanding of Quranic and Hadith texts, while AI-based edtech solutions can offer personalized Islamic education and smart learning platforms for different age groups, according to Saidi.

Innovators are developing AI-powered Islamic chatbots, voice assistants, and digital Da’wah tools to facilitate knowledge sharing.

Startups are already making an impact. Pakistan’s Xeven Solutions recently launched Shahada GPT, offering Quranic translations, Hadith explanations, and halal guidance. Similarly, India-based QuranGPT answers religious queries. 

“The primary motivation behind developing QuranGPT was to bridge the gap between religion and modern individuals,” says Raihan Khan, an AI applications engineer and creator of QuranGPT. 

“Nowadays, people don’t want to spend hours flipping through books to find an answer or determine if something aligns with the teachings of the Holy Quran. QuranGPT simplifies this process by providing instant responses in natural language.”

However, combining AI with religious guidance carries significant risks. Without human oversight, AI can easily misinterpret Islamic teachings, spread misinformation, and inadvertently cause harm.

“While AI has the potential to enhance various aspects of the Islamic economy, its intersection with religion must be approached with extreme caution,” Khan warns.

“The biggest concerns lie in the inherent biases of AI models, the risk of misinformation, and the challenge of ensuring religious authenticity. Without strict monitoring, AI could do more harm than good in this space,” he adds.

Limited adoption

Despite AI's promise, adoption in the Islamic economy remains in its early stages. Most Islamic tech startups have yet to fully embrace AI, focusing instead on basic automation rather than sophisticated, AI-driven innovation.

“As of now, AI’s role in fostering innovation in the Islamic economy - particularly in tech startups or digital finance - is minimal,” says Khan. “While AI has the potential to enhance areas like Islamic banking, halal certification, and ethical investment screening, most Islamic tech startups have yet to fully explore or implement AI-driven solutions.”

30 Apr 2025
Insight
Opinion
Australia rekindling relationships with the Muslim World  

There was a palpable silence at the end of a premier screening of the documentary ‘Before 1770’ held late last year, punctuated only by distant sobs and the ruffling of tissue packets emanating from the audience of largely Muslim Australians.  

The reason why the feature documentary - showcased in multiple screenings across the country - evoked such an impassioned response was because it represented the connection Australia and its First Nations people held with the Muslim world.  

This deep connection, starting sometime in the mid-1600s, lasted for centuries until 1907 when the last ‘Perahu’ (sailing boat) from Makassar visited Arnhem land in Northern Australia. 

Dr Imran Lum (Image source: Supplied)

The reason why it resonated strongly with Muslim Australians, was because it was an untold story omitted from Australian history books; a tale intricately linking them with Australia’s First Nations people and their legacy. 

Before White colonisation, Muslim Bugis and Makassar traders would sail with the monsoon winds via the Flores and Savu seas, arriving on the shores of Northern Australia in places like the Kimberley and Arnhem Land to meet First Nations trading partners like the Yolŋu people.  

They would trade in trepang, a type of sea cucumber which was a delicacy and an aphrodisiac they would sell to lucrative Chinese markets. While their motivations for visiting Australia might have been for trepang, this was all part of wider regional trade patterns which connected Arab, Indian and Chinese markets via the Malay Archipelago.

These same Bugis seafaring traders would find themselves immersed in mercantile activity in historic port cities dotted across the Indian ocean like Aden, Muscat, and even as far as Zanzibar.  

Australia for them, was just part of an ancient maritime silk road that swapped out camels for Perahu sailing boats that covered vast distances with monsoonal winds. 

Fast forward a hundred years or so with the rise of the modern global Islamic economy, the vibrant Australian Muslim community like the Bugis before them, are rekindling historic linkages with the Muslim world through trade, halal food and Islamic finance.  

Australia is a melting point of a vibrant and dynamic Muslim population base comprising more than 70 different ethnicities. Nearly a million Muslims - more than half under the age of 25 -reside in growth areas in all the major cities and help create robust networks for business and investment opportunities.  

Halal food is now an AU$2 billion industry that helps serve the local Muslim community as well as major export markets such as Indonesia, Malaysia, the UAE and Saudi Arabia. Over 70% of Australian abattoirs are now reported to be halal certified.  

Muslim students from around the world are fostering long-lasting linkages with Australia. More than 30,000 students from Malaysia, Indonesia, and Pakistan and over 15,000 from the GCC are enrolled across universities and higher education institutes in the country. The Brunei government sends hundreds of students on scholarships to Australian universities each year. 

Education services with Muslim-majority countries amount to nearly AU$4 billion annually, generating revenue as well as creating investment opportunities across several quarters, including student accommodation, migration and employment, and halal food services. 

Lastly, Islamic finance is perhaps an untapped gold mine for Australia, having remained under the radar of Islamic investors worldwide for decades. For enterprising investors, Australia emerges as an unexpected yet compelling destination for Islamic investment. 

For select Islamic investors, Australia is not a distant continent, rather a destination that is geo-strategically situated on the fringes of vibrant Southeast Asian economies and one that offers a unique combination of a well-regulated market alongside growth opportunities for Islamic-conscious capital. 

The recently signed Australia-UAE Comprehensive Economic Partnership Agreement is the first Free Trade Agreement between Australia and a Middle Eastern country, facilitating investments in local projects. Shariah-compliant real estate investment has gained ground too, with institutions such as the National Australia Bank (NAB) offering Islamic products, enabling Muslims to finance their projects.

This unique offering has facilitated numerous partnerships between Islamic investors from the GCC and Southeast Asia and the vibrant and entrepreneurial Muslim business community in Australia. 

Shariah-compliant fixed-income solutions is another area of opportunity with Australia one of the rare AAA rated countries in the world according to Moody's, S&P and Fitch. There is a slew of ASX100 companies that are investment grade and above, offering a huge opportunity for Islamic fixed-income products or Sukuk bonds. 

With ongoing tariffs and geopolitical realities, perhaps Australia is not as far away as one might believe. With its growing young and dynamic Muslim community, Australia offers a combination of economic stability, diverse investment sectors, and financial governance. Throw delicious halal food in the mix and we have a sweet spot of opportunities. 

Perhaps now is the time for Islamic investors to set their sails Down Under. 
 
Dr Imran Lum is the head of Islamic finance at a major Australian bank. He is the host of the ‘Muslim Money’ Podcast and the author of 'A Comparative Study of Riba and Islamic finance in Australia and the UK (Routledge)'.

The opinions shared here are his own and do not reflect the views of his employer
 

24 Apr 2025
Insight
Islamic Finance
Pakistan’s push for interest-free banking faces challenges

Pakistan is aiming to implement an interest-free Shariah-compliant banking system by January 2028. While the ambition reflects a momentous shift toward an Islamic values-based financial system, practitioners caution that unresolved challenges could undermine the transition.

Renewed political will
In April 2022, the Federal Shariat Court (FSC), the country’s constitutional Islamic religious court, ruled that the entire banking system must be completely free of riba – more commonly known as interest - by the end of 2027. The court instructed federal and provincial governments to amend relevant banking laws to comply with the Shariah legislation. 

The directive, however, wasn’t the FSC’s first attempt to push for a fully Islamic banking system. The religious court made an initial declaration in 1999, notes Dr Sanaullah Ansari, CEO of Al-Iqtisad Consulting, only for it to be delayed by later governments through appeals and legal reviews. 

“This process continued and finally, in April 2022, FSC ordered the government to convert the current conventional banking system by December 31, 2027,” he says. 

However, this time there is adequate political will to introduce Islamic banking, complemented by a clear roadmap accorded by the State Bank of Pakistan (SBP), the country’s central bank. Following the FSC’s decision, the SBP released its five-year plan (2023–2028), setting ambitious goals to transform the conventional banking sector. 

There are currently 22 banks operating in Pakistan, including six fully-fledged Islamic lenders. Many of the remaining conventional banks either operate Islamic windows or have started planning for a full conversion. United Bank Limited (UBL) and Faysal Bank have transitioned, while Bank of Khyber and National Bank of Pakistan are en route. Others like Bank of Punjab are also exploring the shift.

In parallel, the Securities and Exchange Commission of Pakistan (SECP) - the country’s financial regulatory agency - introduced the Shariah governance guidelines in January 2023.

These apply to non-banking financial companies, Takaful operators, and private pension funds, with the aim of deepening Islamic capital markets.

Sovereign debt, coordination mar outlook 
Pakistan is the second-largest Muslim-majority country in the world. However, despite strong numbers, financial inclusivity across the country is fairly tepid. The country’s sovereign debt profile is another critical factor; the IMF notes that government debt stands at 71.4% of the Southeast Asian nation’s GDP, much of which is denominated in conventional, interest-bearing instruments.

“Most of the government’s liabilities are in conventional form,” says Mohamed Damak, head of Islamic Finance at S&P Global Ratings. “The government could choose to issue only sukuks going forward to refinance all commercial debt and net new borrowings, assuming that the market appetite for these instruments will be there.”

Damak adds that a significant portion of the debt is in the form of multilateral loans, bilateral loans, and central bank swap lines, with some of the multilateral loans having very long-term tenors. “It remains to be seen if and how these can be converted or structured in a Shariah-compliant format,” he adds.

Farrukh Raza, CEO of Islamic Finance Advisory & Assurance Services (IFAAS), believes that renegotiation is likely to take time due to legal and risk concerns from creditors, as well as the complexity of restructuring existing debt. “Stakeholders need to stay focused and resolve these matters as soon as possible.” 

Despite steps taken by the SBP and SECP, several market practitioners highlight a lack of coordination between key institutions and an absence of clear, realistic timelines.

“There needs to be a more well-thought-out process with a realistic plan and determined goals,” says Raza. “There needs to be better coordination with policies and implementation among the different entities in the country.”

He outlines three critical requirements for a successful transition.

“There needs to be a political will to genuinely support this transition and all stakeholders to be aligned on making it happen,” he says. 

“Secondly, you need a well-structured roadmap with clear targets and timelines for everyone to understand and work towards. Thirdly, you need to create a national champion among state institutions to own, lead and deliver this transition.”

This lack of coordination is closely tied to insufficient communication. Public engagement has been limited, with few workshops, conferences, or awareness campaigns to educate stakeholders about what this transition entails, according to Ansari.

“While the SBP and SECP have done valuable work, the broader market is still unclear about how this transition will play out,” he says. “Without consistent messaging and cooperation between players, implementation by 2027 will be difficult.”

Changing perceptions
A significant challenge lies in public perception. Many consumers raise doubts on the veracity of the Islamic banking system, considering it a repackaged version of the conventional banking system. This lack of trust dents its uptake as well as its credibility. 

Ansari notes that many banking customers question whether there is a meaningful distinction between Islamic and conventional products. “Whilst a lot of work has been done to facilitate Islamic banking, there is still a perception that it is merely a replication of conventional banking,” he says.

Sceptics also point to challenges in countries that have adopted Islamic financial systems, including Iran, Sudan and Afghanistan, though Raza believes comparisons with those countries to be unfair. 

“It’s not fair to compare Pakistan’s transition with these countries because all of them remain challenged on the international stage,” he says. “The issues they face are political in nature and not due to their financial systems being Shariah-compliant.”

Creating goodwill through education and awareness in addition to a clear timeline and roadmap to assimilate these changes thus remains key. 

22 Apr 2025
Insight
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