Modernisation is making South-East Asia more Islamic
The Economist
February 25, 2026
AI-Generated Deep Dive Summary
Modernisation in South-East Asia is leading to a rise in Islamic influence, particularly in Malaysia and Indonesia, despite their economic growth not translating into secularism. Historically, these nations focused on combating Islamist extremism through strong government actions, but today, Islam is asserting itself more subtly yet significantly through politics, legal systems, consumer culture, and social norms.
The shift is evident in changes to education systems, where Islamic studies are increasingly prioritised, and in legal frameworks that reflect Sharia principles. Public behaviour is also being influenced by a growing piety, with stricter enforcement of religious norms and increased participation in religious practices. This transformation is driven by both political agendas and societal pressures, reflecting a broader cultural shift.
For businesses operating in the region, understanding this trend is crucial. Companies are adapting by aligning their products and services with Islamic values, such as offering Sharia-compliant financial solutions. However, this also presents challenges, as secular or non-Islamic businesses may face pushback. The rise of Islamic consumer culture creates opportunities in sectors like halal food production and Islamic finance, while also requiring firms to navigate complex regulatory landscapes.
This trend underscores the interconnectedness of economic development and cultural identity. As South-East Asia becomes more Islamic, businesses must not only adapt but also be mindful of potential market shifts driven by growing religious sentiment. The region’s economic growth is increasingly intertwined with its evolving spiritual and social dynamics, shaping both opportunities and challenges for global and local enterprises alike.
In conclusion, the modernisation of Malaysia and Indonesia is fostering a re-emergence of Islamic influence that businesses cannot ignore. This shift presents both challenges and opportunities, requiring companies to be attuned to cultural and legal changes while adapting their strategies to thrive in this evolving environment.
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Originally published on The Economist on 2/25/2026