Press Release on Launch of Masterplan For World’s First Labuan Shariah-Compliant Blockchain Hub
Launch of Masterplan For world's First Labuan Shariah-Compliant Blockchain Hub
Kuala Lumpur, 28 May 2024: Minister of Finance II, YB Senator Datuk Seri Amir Hamzah Azizan launches the Masterplan for world’s first Shariah-compliant Blockchain Hub (SBH) for the Labuan International Business and Financial Centre (Labuan IBFC) in conjunction with the Global Forum on Islamic Economics and Finance (GFIEF) 2024 today.

The Labuan SBH Masterplan developed by Labuan Financial Services Authority (Labuan FSA) aims to transform Labuan IBFC into a digital financial hub and a launch pad for blockchain technology, establishing a complete digital ecosystem. The initiative is in line with Malaysia’s National Blockchain Roadmap 2021-2025 which aims to steer the country towards embracing Blockchain 2.0.

The unique features of Labuan Shariah-compliant blockchain are:

  • Creates a financial system that promotes social justice, economic stability, and ethical behaviour in accordance with the principles of Shariah law.
  • Screens and eliminates prohibited activities such as interest-based transactions, uncertainty or speculation. The uses of Artificial Intelligence (AI) in the Shariah screening process would enhance efficiency, accuracy and transparency. It would also ensure consistent and real-time compliance with Shariah principles while proving a secure and immutable record of transactions.
  • AI technology helps to monitor end-to-end transactions are Shariah-compliant.
  • Employs smart contracts on the blockchain to automate and enforce contractual process for Islamic institutions within the Shariah parameters.

The Labuan SBH Masterplan is integral to the Islamic Digital Asset Centre (IDAC) initiative launched in 2022, with the aim of attracting digital assets and fintech players to Labuan, while establishing a niche in the digital Islamic finance sector. As Labuan IBFC envisaged to assume a more prominent role as a fundraising and investment hub in the global digital space, the launch of the Labuan SBH Masterplan is timely. It offers technology-driven solutions for fundraising and fostering economic development across various sectors by catering to a diverse array of global investors and players.

Minister of Finance II, YB Senator Datuk Seri Amir Hamzah said: “With the demand for Shariah-compliant investment products estimated at USD3.8 trillion globally, the adoption of the blockchain technology serves a greater contribution to Islamic economy especially in addressing the huge gap and untapped market of the 1.9 billion Muslim community”.
“This Masterplan would harness the potential of blockchain technology to enhance the Islamic digital economy ensuring that it meets the needs and values of the global Muslim community, while positioning Malaysia as a global leader in Islamic digital finance,” he said.

At the launching ceremony, Mr. Nik Mohamed Din Nik Musa, Director-General of Labuan FSA said: “Labuan IBFC is envisaged to be at the forefront of Islamic digital finance, providing cutting-edge decentralised application technology and smart contracts to serve the global ‘ummah’ and beyond. The establishment of Labuan Shariah-compliant Blockchain Hub is poised to revolutionise the global Islamic finance landscape moving forward.

“This initiative will serve as a catalyst for progress fostering engagement, connection, and collaboration among international fintech and digital technology providers to develop and offer innovative products and services, including to the unserved and underserved market segments worldwide”.

Government’s Support

In an effort to bolster Labuan IBFC’s status as a primary hub for Islamic finance, the Malaysian Government has granted a five-year, zero percent tax exemption effective from Year of Assessment 2024 for Labuan Islamic digital players. These tax incentives would further rejuvenate Labuan’s Islamic finance sector and complement Labuan FSA’s initiative to enhance Islamic finance further. This bodes well with Malaysia’s global leadership position in Islamic finance, as outlined in Malaysia's Madani Economy Framework.

Labuan Financial Services Authority
28 May 2024


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