Keynote Address at IFN Green & Sustainable Finance On-Air Forum
14 December 2020  |   By: Sharifatul Hanizah Said Ali, Executive Director, ICMD, Securities Commission Malaysia
Keynote Address by Sharifatul Hanizah Said Ali
Executive Director, ICMD, Securities Commission Malaysia
IFN Green & Sustainable Finance On-Air Forum
14 December 2020

Distinguished guests,
Ladies and Gentlemen
Assalamu’alaikum and a very good day to all

Introduction

1. Firstly, I would like to thank the organisers, REDmoney and its Forum partners, for inviting me to this event.
2. Although this event is conducted virtually or ‘on-air’ as the Forum says, it is encouraging to note the industry’s ongoing passion and participation for the sustainability agenda. The alignment of sustainable finance to the values and principles of Islamic finance and investing has become a globally accepted concept amongst issuers and investors.
3. Recognition of this alignment is at the heart of the SC’s initiatives in sustainable financing which we embarked on in 2014 when the SC issued its SRI Sukuk framework.
4. Since then, there has been significant traction in this space. I believe Malaysian issuers have issued the largest number of corporate sukuk issuances to date currently standing at 11 green and sustainable sukuk issuances. This is due in no small part to the entire ecosystem of industry players. It has been heartening to note that our intermediaries – from the investment banks to the rating agencies, law firms and Shariah advisors have accepted and embraced the need for sustainable financing and have worked alongside the regulators to advance its development.
Ladies and Gentlemen

2020 in Review

5. As 2020 draws to close, allow me to first highlight some of SC’s more recent efforts in championing and facilitate sustainable finance.
6. At the end of 2019, the SC revised its SRI Sukuk Framework, expanding the list of SRI projects deemed eligible under the Framework to provide clarity whilst encouraging diversity and innovation in the types and variants of sustainable sukuk. To date, the 11 corporate issuances are to finance a range of projects including large scale solar, green buildings, hydropower and education.
7. As we continue to build up a holistic sustainable finance ecosystem, to those in the audience, allow me to encourage you to consider other innovative projects that may be financed under the Framework. Growth and development in this space will be underpinned by the breadth of projects and innovative transactions.
8. To further encourage sustainable finance, the government of Malaysia in its budget proposal last month, announced measures that I believe will continue to advance Malaysia on an upward trajectory in developing its sustainable finance ecosystem.
9. To encourage the issuance of sustainable sukuk and bonds, the SRI Green Sukuk Grant issued by the Securities Commission has now been extended to cover not just green sukuk but all types of SRI sukuk and bonds. Further, the tax exemption on this grant has been extended for a five years ending 2025.
10. The Government will also continue the Green Technology Financing Scheme 3.0 or GTFS3.0 with a fund size of RM 2 billion for two years up to 2022 which will be guaranteed by Danajamin to encourage the issuance of SRI sukuk. The GTFS is a special financing scheme that was first introduced in 2010 by the government to support the development of Green Technology in Malaysia.
11. Earlier this year the Malaysian government issued the ‘Sukuk Prihatin’ to contribute towards country’s economic recovery following the COVID-19 pandemic. Following this, the government has announced the issuance of its first sovereign sustainability bond or sukuk for environmental and social initiatives in 2021. This issuance will be yet another significant milestone for Malaysia in signalling the commitment by the country as a whole – government, regulators, investors, corporates and intermediaries.

Impact of COVID 19

Ladies and Gentlemen

12. I would be remiss if I did not speak on the impact that COVID 19 has had on our efforts in driving the sustainability agenda. I assure you that the agenda has not taken a back seat. If anything, the pandemic has provided greater impetus, urgency and motivation to consider environmental, social and governance factors in how to move forward.
13. Whilst funding a transition to a low-carbon economy is still high on the sustainability agenda, we now are taking a closer look at how funding can make a greater impact on social issues: protecting jobs and livelihoods, ensuring greater equality and alleviating poverty.
14. In this regard, the capital market is well placed to utilize the concept of waqf or the Islamic endowment, which we believe can be a tool for growth in the social finance space.
15. In this context, I am pleased to share another recent milestone by the SC. Last month the SC launched the Waqf-Featured Fund framework to facilitate the offering of unit trust funds and wholesale funds with waqf features that integrate commercial and social objectives.
16. I am pleased to note that several Islamic fund management companies have expressed strong interest and working on readiness to launch Waqf-Featured Unit Trust Funds.
17. For waqf to thrive as a capital market product it is important that there is a stable, sustainable and consistent income stream from waqf assets. Ladies and gentlemen, on the topic of waqf, allow me to once again urge you to look beyond the norm, to consider the possible innovative, diversified use of waqf assets, perhaps through the issuance of waqf-enabled sukuk for Shariah-compliant social infrastructure projects.
18. Much work has been done in identifying how this concept, so naturally aligned with social outcomes may be used within the context of sustainable finance and investing. I am certain that the future holds much promise for waqf-enabled sustainable financing and funding and I look forward to seeing how this is utilized by our industry.
19. Within the social finance space, Islamic crowdfunding has also been instrumental in facilitating fundraising through the capital market for social projects, particularly in the microfinance and small-to-medium enterprise segments. To date, the SC has observed that a reasonable amount has been raised through Islamic crowdfunding platforms and I expect that we will see further growth within this space as more micro enterprises and SMEs continue to seek funding to sustain and grow their businesses.

Closing

20. As I draw to a close, ladies and gentlemen, please allow me to leave you with something to consider. The pandemic has given us a new lens through which to view how and what we finance, fund and invest in.
21. Social, governance and environmental principles are being prioritised more than ever before and as a whole, the business world is now placing a significantly larger emphasis on the concept of ‘doing good’.
22. As titans of the Islamic finance industry and leaders of Islamic financial institutions, I urge you all to consider how Shariah-compliant finance and funding can take the lead in the delivery of innovative funding solutions that will further the development of our sustainable ecosystem.
23. With this, I wish to express my deepest appreciation to everyone present here today, and I look forward to the panel session ahead. Thank you.
 
End
GET IN TOUCH
General Line: +603-6204 8000
related sites
© Copyright Securities Commission Malaysia   |   Contact Us   |  Disclaimer  |  The site is best viewed using Internet Explorer 11 and Google Chrome with mimimum resolution of 1280x1024
Ooops!
Generic Popup