Islamic Finance 

Malaysia’s Sustainable and Responsible Investment (SRI) Sukuk Framework examplary for regional green financing

| 21 August, 2017
Malaysia’s Sustainable and Responsible Investment (SRI) Sukuk Framework examplary for regional green financing
Photo: Securities Commission Malaysia Chairman Tan Sri Ranjit Ajit Singh speaks to media during the Securities Commission Malaysia - World Bank Conference at Bukit Kiara, Kuala Lumpur, Malaysia on May 8, 2017. Pix by Yazit Razali / New Straits Times

Mon Aug 21, 2017 | 4:10PM MYT | KUALA LUMPUR

Other Asean countries are welcome to replicate Malaysia’s Sustainable and Responsible Investment (SRI) Sukuk Framework in order to create a more cohesive regional environment for green financing.

“As you know, we launched what is arguably the world’s first SRI Sukuk Framework back in 2014, and this framework has been gaining traction,” said Securities Commission Malaysia executive chairman Tan Sri Ranjit Ajit Singh at the CIMB Asean Research Institute (CARI) Asean Roundtable Series this morning.

“We have issued a green sukuk recently and I believe this will be a further push towards enhancing the green financing and green capital markets.

“This is the start into deepening the market and we welcome any Asean countries to replicate this framework,” he said.

Ranjit said green financing and green bonds have the potential of fulfilling the needs of infrastructure funding in Asean.

“In fact, a number of corporates and fund managers have expressed their eagerness in working with the framework and we call upon more corporates to do so.”

He referred to an NST Business report today entitled “World Bank sees massive potential in green sukuk” in underlining the importance of this segment.

“Malaysia has been innovative enough to come up with the SRI Sukuk Framework as we believe that there is massive potential in it.

“This potential is also echoed by the World Bank, which sees Malaysia having the capabilities of attracting more funding into Asean by way of green financing through the framework.”

In the report, World Bank lead financial sector specialist Jose De Luna Martinez said the RM250 million Green SRI Sukuk Tadau issued recently would potentially lead Malaysia to become a green sukuk hub of Asean.

“There is an interest to develop a marketplace because Malaysia has a domestic capital market and it is also in the interest of the government to continue the internalisation of the Malaysian capital markets.

“This type of instrument will attract more foreign direct investments because outside of Malaysia there is a lot of money in the hands of institutional investors, governments and the likes, and some of them have to be allocated in green assets.

“It is possible that neighbouring countries will also use this platform already created in Malaysia to raise money. So we will definitely see that by having a new asset class, Malaysia will be able to attract capital inflows and encourage potential issuers to use this platform and raise money, and ultimately, contribute to the development of the capital market,” he said.

The roundtable, titled “Deepening Capital Markets in Asean: Opportunities and Challenges”, was moderated by CARI chairman Tan Sri Munir Majid. Present was CIMB Group chairman Datuk Seri Nazir Razak.

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