Malaysia has unveiled an ambitious plan for its Labuan International Business and Financial Centre (Labuan IBFC) to become the world’ first Shariah compliant blockchain hub.
Being the first nation to recognize crypto assets as Halal, Malaysia aims to garner a bigger share of the estimated US$3.8 trillion global demand for Shariah compliant investment products with this Labuan IBFC push.
Malaysia has further granted a five-year tax exemption from 2024 as part 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.
Supporting this outlook is a private sector drive to elevate Labuan IBFC into a regional digital settlement and trading hub like Dubai via cooperation among both local and international parties, including blockchain outfits.
Spearheaded by Labuan Islamic digital assets firm Tijarah, this drive takes advantage of Labuan’s strategic central location within Southeast Asia and its closeness to China, Korea and Japan.
Tijarah aims to set up a digital payment system for instant settlements to hasten receipts, rather than using the slower local banking processes, Tijarah COO Dimitri Rizzi told IFN Investor.
For this aspect, Tijarah taps into its own global payment system driven by blockchain technology — which is already offered through GC Global Finance, GCB Trust and GC Exchange.
Offering full Shariah compliance for payment systems using blockchain technology, the effort aims to start with ship-to-ship transfers of crude oil — which forms a critical lifeblood to economies in Northeast Asia.
This Labuan blockchain initiative is further seeking self-regulation status among participating parties, similar to how Bursa Malaysia operates, to avoid having to wait for necessary changes in local legislation, Dimitri added.
