Kuala Lumpur, 8 May 2017
Securities Commission Malaysia and World Bank Discuss Greater Role of Islamic Infrastructure Finance
Islamic finance can play a greater role in infrastructure financing via Public Private Partnerships (PPP) to facilitate more sustainable developments, said Securities Commission Malaysia (SC) and World Bank Group at a joint conference held at the SC’s headquarters at Kuala Lumpur today.
Themed “Islamic Finance and Public-Private Partnerships for Infrastructure Development”, the SC-World Bank Group Conference brought together development practitioners, policy makers, regulators, as well as stakeholders involved in Islamic finance and infrastructure to discuss policy, regulatory and institutional interventions that can offer solutions for global infrastructure development needs. According to a World Bank study1, annual global infrastructure investments are estimated in the region of US$2.65 to US$3.7 trillion with Emerging Markets and Developing Economies (EMDE) facing an annual infrastructure investment gap of US$452 billion.
The conference also featured the sharing of Malaysia’s extensive experience in using Islamic financial instruments to support infrastructure development as data shows that 61% of the world’s infrastructure sukuk was issued out of Malaysia2 while the Global Infrastructure Investment Index 2016 ranks Malaysia as the second most attractive destination for infrastructure investment in Asia, and fifth in the world.
“A critical imperative for infrastructure financing is to successfully bridge the gap between the demand for capital and the supply of it. The Securities Commission Malaysia has long recognized the promising potential of the Islamic capital market as an alternative avenue for large-scale long-term fundraising. In this regard, Sukuk, given their asset-based and risk-sharing nature, are particularly apt for infrastructure financing,” said Tan Sri Ranjit Ajit Singh, Chairman of the SC.
“At the World Bank Group, we strongly believe that Islamic finance has an important role to play in addressing the development challenges facing our client countries. The World Bank Group’s involvement in Islamic finance is directly linked to our objectives of reducing poverty, promoting financial sector development, broadening financial inclusion, and building financial sector stability and resilience in client countries,” said Laurence Carter, Senior Director, Infrastructure, Guarantees and Public-Private Partnerships, World Bank Group.
The one and half day conference is the first collaboration between SC and World Bank Group on a multi-year engagement involving Islamic finance and infrastructure financing. The discussion on day one focused on the key issues in mobilising Islamic finance for infrastructure needs while the second day was a closed-door roundtable of experts to elaborate on technical matters, workable solutions and possible pilot projects.
|[From left to right]: Jose De Luna Martinez, Lead Financial Sector Specialist, World Bank; Abayomi A Alawode, Head of Islamic Finance, World Bank; Laurence W Carter, Senior Director Public Private Partnerships, World Bank; Tan Sri Ranjit Ajit Singh, Chairman, Securities Commission Malaysia; Dato’ Ahmad Fairuz Zainol Abidin, Deputy Chief Executive, Securities Commission Malaysia; Zainal Izlan Zainal Abidin, Managing Director, Development and Islamic Markets, Securities Commission Malaysia; Walid Abdel Wahab, Director, Infrastructure Department, Islamic Development Bank at the Securities Commission Malaysia-World Bank Conference on Islamic Finance and Public-Private Partnership for Infrastructure Development.|
SECURITIES COMMISSION MALAYSIA
WORLD BANK GROUP
1 Infrastructure Investment Demands in EMDEs, World Bank, Sept 2015
2 ISRA (International Shari’ah Research Academy for Islamic Finance) figures covering period 2012 to 3Q2015