Muslim financial literacy on the rise in Malaysia, but more needed

SHAH ALAM - There's a positive trend in financial literacy among Muslims in Malaysia.

Universiti Sains Islam Malaysia Faculty of Economics and Muamalat Senior Lecturer, Dr Umi Hamidaton Mohd Soffian Lee attributes this to a growing desire within the community to learn Syariah-compliant financial management.

To bolster financial stability, Umi Hamidaton suggested cultivating positive habits such as budgeting based on income and essential needs, favouring cash purchases and avoiding unnecessary debt. Pix for illustration purpose only. - FILE PIX

However, she believes ongoing work is needed to deepen this understanding.

"While progress is evident, some Muslims still need to fully grasp the importance of sound financial planning.

"This includes structured debt management, avoiding extravagance and understanding Islamic financial concepts like the prohibition of usury and uncertainty.

"Poor financial management has negative repercussions for individuals, families and communities," she said.

To bolster financial stability, Umi Hamidaton suggested cultivating positive habits such as budgeting based on income and essential needs, favouring cash purchases and avoiding unnecessary debt.

She encouraged saving and investing in Syariah-compliant platforms, while remaining vigilant against transactions involving usury or uncertainty.

"Charitable giving and fulfilling zakat obligations are also recommended to seek blessings and peace of mind in financial management," she added.

She stated that zakat and waqf instruments are important tools to combat poverty, but their efficacy hinges on sound governance and management.

"Zakat provides short-term relief, whereas waqf can become a sustainable source of economic development if strategically employed.

"For example, waqf can fund essential infrastructure like education, housing, and healthcare, offering long-term benefits to society," she said.

Umi Hamidaton also addressed consumer hesitation when choosing between conventional and Islamic banking.

"Some in the community misunderstand Islamic banking products, viewing them as simply rebranded conventional offerings.

"In reality, this system operates without usury and adheres to Syariah principles.

"While challenges exist regarding product variety and competitiveness, continued efforts are necessary to strengthen this sector, making it more inclusive and accessible," she said.