Unraveling Malaysia's Dominance: A Porter's Diamond Analysis of the Islamic Financial Ecosystem: A Porter's Diamond Analysis of the Islamic Financial Ecosystem

Prayoga prayoga; Faqih Nabhan

doi:10.70062/incoils.v5i1.381

Authors

Prayoga prayoga UIN Salatiga
Faqih Nabhan Universitas Islam Negeri Salatiga

DOI:

https://doi.org/10.70062/incoils.v5i1.381

Keywords:

Islamic Finance, Malaysia, Porter's Diamond Model, competitive advantage, IFDI

Abstract

The 2023 Islamic Finance Development Indicator (IFDI) report reveals a significant academic anxiety: Malaysia's dominant score of 103 starkly contrasts with Indonesia's 58, creating a 45-point gap despite Indonesia's demographic advantages. This research purpose is to dissect the factors behind Malaysia's superior national competitive advantage by applying Porter's Diamond Model. The study uses a quantitative descriptive method via a single case study of Malaysia. It analyzes secondary time-series (2014-2023) and cross-sectional (2023) data from Statista, mapping them to Porter's pillars. Data analysis techniques include Trend Analysis, CAGR, and Composition Analysis. The results demonstrate that Malaysia's excellence is systemic. (X1) "Factor Conditions" are proven by massive asset growth (CAGR 10.63%) reaching 1018.00 Billion USD. (X2) "Demand Conditions" are confirmed by mature domestic savings growth (CAGR 9.71%). (X3) "Related and Supporting Industries" are uniquely structured, with a dominant (63.02%) household financing sector providing stability that supports the entire ecosystem. This 'Diamond' is strongly shaped by state rivalry and strategic government regulation.

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