Kuala Lumpur, 14 May 2018 -- Malaysia is leading efforts for convergence of Islamic and green financing following the country's issuance of the world's first green sukuk in July 2017. To date, five green sukuk have been issued under the Securities Commission Malaysia’s (SC) Sustainable and Responsible Investment (SRI) Sukuk Framework totaling RM2.407 billion, with more expected during the year.
This trend, along with the numerous enabling components for this class of innovative, inclusive and sustainable financial assets, are discussed and showcased at a joint conference today organised by the SC, World Bank Group Global Knowledge and Research Hub in Malaysia and the International Organisation of Securities Commissions (IOSCO) Asia Pacific Hub also located in Malaysia.
Harnessing Islamic Finance for a Green Future, a joint conference by Securities Commission Malaysia, World Bank and IOSCO Asia Pacific Hub. From left to right: Jose De Luna Martinez, Lead Financial Sector Specialist, Finance, Competitiveness and Innovation Global Practice, The World Bank; Richard Record, Lead Economist and Acting Country Manager for Malaysia, The World Bank; Tan Sri Ranjit Ajit Singh, Chairman, Securities Commission Malaysia; Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive, Securities Commission Malaysia; Abayomi A. Alawode, Lead Financial Sector Specialist & Head of Islamic Finance, Finance, Competitiveness and Innovation, The World Bank; and Foo Lee Mei, Chief Regulatory Officer, Securities Commission Malaysia and Member, Management Committee, IOSCO Asia Pacific Hub. Source: Securities Commission Malaysia.
Themed “Harnessing Islamic Finance for a Green Future”, the conference today gathered 200 industry practitioners, policy makers and experts in Islamic finance and sustainable investment space to discuss key policy, regulatory and institutional elements needed to further increase market adoption of Islamic finance for climate mitigation and adaptation efforts.
According to a study by the United Nations Environment Programme and DBS, the demand for additional ASEAN green investment from 2016 to 2030 is valued at an estimated USD$3 trillion. Malaysia’s leadership in green infrastructure finance would be a key element in attracting investment capital to fund sustainable development in the region.
Tan Sri Ranjit Ajit Singh, Chairman of the SC said, “Innovations in the use of Islamic financial instruments can go a long way in supporting sustainable development. In line with rising demand, the SC continues to facilitate the development of the ecosystem and products that meet the requirements of both SRI and Islamic finance, ensuring the capital market serves the needs of investors and issuers.” He added, “This collaboration with international bodies such as the World Bank and IOSCO helps build relevant expertise and capacity in the market and promotes the sharing of best practices in the development of sustainable financing.”
Richard Record, Acting Country Manager for the World Bank’s Global Knowledge and Research Hub in Malaysia, said, “The pioneering issuances of green Sukuk in Malaysia demonstrate the substantial potential of deploying Islamic finance instruments to support the green agenda. This was accomplished through the partnership between the World Bank’s Malaysia Hub, the Malaysian government and other stakeholders. We intend to build on these accomplishments to foster the use of such instruments to finance sustainable development and build resilience to climate change and natural disasters in our client countries”.
To further encourage green sukuk issuances, the SC recently established the Green SRI Sukuk Grant Scheme which helps to offset the additional cost of an independent review, also known as a second opinion, which certifies a debt instrument as meeting green criteria. The grants are open to both domestic and foreign companies in any currency, provided the sukuk are issued in Malaysia, with grants being tax-exempt provided applications are received before December 2020.
SECURITIES COMMISSION MALAYSIA
WORLD BANK GROUP
IOSCO ASIA PACIFIC HUB
About Securities Commission Malaysia
Securities Commission Malaysia (SC), a statutory body reporting to the Minister of Finance, was established under the Securities Commission Act 1993. It is the sole regulatory agency for the regulation and development of capital markets. SC has direct responsibility for supervising and monitoring the activities of market institutions, including the exchanges and clearing houses, and regulating all persons licensed under the Capital Markets and Services Act 2007. More information about SC is available on its website at www.sc.com.my. Follow SC on twitter at @SecComMy for more updates.
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About World Bank Group in Malaysia
The World Bank Group Global Knowledge and Research Hub in Malaysia is the first of its kind, serving both as a field presence in Malaysia and as a global knowledge and research hub. The new hub focuses on sharing Malaysia's people-centered development expertise and creating new innovative policy research on local, regional and global issues.
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About IOSCO Asia Pacific Hub
Operationalised in mid-2017, the International Organisation of Securities Commissions (IOSCO) Asia Pacific Hub, located in Kuala Lumpur is the first regional hub of IOSCO established outside of its headquarters in Madrid. Hosted by the Securities Commission Malaysia, the IOSCO Asia Pacific Hub plays a key role in regulatory capacity building and helping develop capital markets, particularly in the region. Through its initiatives, the Asia Pacific Hub will facilitate greater cross border regulatory cooperation and promote the transfer of knowledge, expertise and best practices from across IOSCO’s wide membership.
By way of background, the IOSCO is the leading international body of capital market regulators and is recognised as the global standard setter for securities regulation. Established in 1983, IOSCO members from more than 115 jurisdictions, collectively regulate more than 95% of securities markets worldwide.