Other BriefingsIslamic Finance in Singapore: Unlocking Growth Potential in a Strategic Financial Hub
Islamic finance, rooted in Shariah principles that prohibit interest and emphasize risk-sharing, has evolved into a global financial system with over US$5.5 trillion in assets by the end of 2024, projected to reach US$7.5 trillion by 2028. While the sector remains dominant in Muslim-majority countries, international financial centers like Singapore are gaining prominence by facilitating cross-border Islamic capital flows.
With strong governance, legal clarity, and a focus on innovation, Singapore is positioning itself as a trusted gateway for Shariah-compliant finance across Southeast Asia and beyond.
The market landscape and sector momentum
By year-end 2024, Islamic finance assets managed in Singapore reached approximately US$27.4 billion, supported by the launch of new funds like the Lion-BIBDS Islamic Enhanced Liquidity Fund and the continued rise of Shariah-compliant fintech solutions such as Kapital Boost.
The country ranked 4th globally in the Global Financial Centres Index (GFCI 37) in early 2025, reflecting continued confidence in its financial infrastructure. Regional Islamic finance momentum has also intensified. Maybank’s RM2.5 billion (US$540 million) syndicated Islamic financing deal for a Southeast Asian data center in 2025 illustrates growing institutional demand for Shariah-compliant project financing.
Regulatory architecture enabling competitive structures
The Monetary Authority of Singapore (MAS) has created a tax neutrality framework that ensures Shariah-compliant instruments are treated on par with conventional products. Infrastructure sukuk benefits from full tax exemptions, while asset-based financing avoids double stamp duties. These policies enhance Singapore’s competitiveness as a cross-border platform for Islamic financial instruments.
Key growth areas driving Singapore’s Islamic finance potential
Singapore’s Islamic finance ecosystem is shaped by innovation, institutional access, and regional connectivity. The following six areas highlight its most promising growth paths:
Cross-border sukuk and infrastructure financing
In 2024, global sukuk issuance reached US$170 billion. Singapore has begun to attract attention as a listing hub, demonstrated by the SGX listing of a US$250 million sukuk from a UAE infrastructure issuer. Its efficient regulatory framework and legal certainty make it a suitable base for structuring green and sustainability-linked sukuk aimed at international markets.
Islamic fintech expansion
Projected to reach US$179 billion in transaction volume by 2026, Islamic fintech in Singapore is expanding through platforms like Kapital Boost, which support SMEs with halal-compliant financing. The country’s digital finance environment provides fertile ground for fintech innovation in Shariah-compliant payments, lending, and investments.
Shariah-compliant ESG investment products
In Q1 2024, global sustainable sukuk issuance reached a record US$13.4 billion. Singapore’s Sustainable Bond Grant Scheme encourages the development of green and ethical finance products that align with both ESG and Islamic values.
Although domestic issuance remains small, regulatory support positions Singapore to lead in ESG-aligned Islamic funds.
Wealth management for regional and global Muslim investors
Singapore offers private banking services tailored to high-net-worth Muslim clients from Southeast Asia, the Middle East, and North Africa. Its stable legal system and broad fund structures support halal-compliant investment portfolios, attracting clients seeking both compliance and security.
International positioning as a financial conduit
Through agreements with centers such as the Dubai International Financial Centre (DIFC) and Qatar Financial Centre (QFC), Singapore provides institutional investors with a seamless route to enter ASEAN markets. Its participation in IFSB and AAOIFI also enhances regulatory alignment for cross-border Shariah transactions.
Education and talent pipeline development
The upcoming Singapore College of Islamic Studies (SCIS), due to open in 2028 with partners including Al-Azhar University, will help develop local expertise in Islamic jurisprudence and finance. Simultaneously, the Asian Institute of Digital Finance (AIDF) fosters Islamic fintech development through academic and applied research.
Strategic geography
Despite these challenges, Singapore’s location and neutrality offer long-term potential.
Strategically located between the Middle East and Asia, Singapore sits near major Muslim-majority economies such as Indonesia, Malaysia, and Brunei, enabling efficient distribution of Islamic financial services throughout ASEAN.
Why Singapore lags traditional Islamic finance leaders
Despite clear regulatory support, Singapore still trails leading Islamic finance centers like Malaysia, Saudi Arabia, and the UAE due to several structural limitations.
The small Muslim population (15.6 percent) restricts domestic demand for Islamic banking and insurance. Singapore lacks dedicated Islamic banks, relying on Islamic windows of conventional institutions, and does not issue sovereign sukuk regularly, unlike Malaysia or Saudi Arabia, where government sukuk anchors deep domestic Islamic debt markets.
In contrast to Malaysia’s centralized Shariah governance, which is overseen by Bank Negara Malaysia and its Islamic finance university, INCEIF, Singapore employs a decentralized model where Shariah boards are institution-specific. This can lead to inconsistency in product approval and investor perception.
A high-trust platform with strategic trajectory
As Islamic finance shifts toward digitization, ESG alignment, and cross-border integration, Singapore is positioned to lead on all fronts. Its fintech readiness, global compliance standards, and green finance roadmap allow it to bridge capital from the Gulf with opportunities in Southeast Asia. Rather than replicating the domestic scale of regional giants, Singapore’s strength lies in serving as a facilitator, a structuring hub, and a trusted jurisdiction.
This article first appeared on ASEAN Briefing, our sister platform.
