The development of the Takaful industry in Malaysia has been encouraged by three main factors. First, the Malaysian Muslim population of more than 60% of the country's population cannot be ignored. Statistics have shown that the Muslims in Malaysia now have greater affluence and are educated; and have developed greater skills. The per capita income of the Malays has grown from 60% of the average per capita income in Malaysia in 1970 to 80% of the average per capita in 2000, attributed mainly to the implementation of the New Economic Policy (NEP) which was designed to eradicate poverty and restructure society, put in place in 1971. Takaful is necessary for Muslims as a replacement for conventional insurance. Having said that, one must hasten to add that Takaful is beneficial not only for the Muslims but also non-Muslims, as it adds variety and widens the choices.
