Prospects of Islamic Finance in Thailand

Abstract

As demand in Shariah-compliant financial services grows both domestically and internationally, Islamic finance in Thailand is expected to experience significant expansion. This study aims to examine the status, future, and challenges of Islamic finance in Thailand. Domestically, the demand for Islamic banking and financial goods is being driven by the growing knowledge among Muslims in Thailand, especially in the southern districts. Market accessibility is further improved by government assistance through regulatory frameworks and programs like the Islamic Bank of Thailand. The study showed that three financial sectors—Islamic banking, Islamic insurance, and the capital market—represent Islamic finance in Thailand.  Thailand is positioned as a possible center for cross-border Islamic financial services due to its advantageous ASEAN location and strong relations with neighboring countries with a majority of Muslims, namely Malaysia and Indonesia. Thus, Thailand might take advantage of the opportunity to become a regional and international hub for Islamic finance. The chances for foreign investment are also improving, as more Middle Eastern investors show interest in Southeast Asian opportunities that are Shariah-compliant. Furthermore, as Islamic finance inherently prioritizes social justice, transparency, and ethical considerations—principles that both Muslim and non-Muslim investors are increasingly seeking—responsible investing and ESG-aligned finance present encouraging opportunities. Thailand can establish itself as a competitive participant in the global Islamic finance ecosystem and promote financial inclusion and sustainable economic growth by leveraging these convergent trends.