Keynote Address at SC-HDC Forum 2021 - Enabling Growth through the Islamic Capital Market
5 August 2021  |   By Datuk Syed Zaid Albar, Chairman, Securities Commission Malaysia
Keynote Address by
Datuk Syed Zaid Albar
Chairman
Securities Commission Malaysia

SC-HDC Forum 2021
“Enabling Growth through the Islamic Capital Market”

5 August 2021

Dato’ Mahmud Abbas, Chairman, Halal Development Corporation (HDC)
Distinguished delegates, Speakers,
Ladies and gentlemen,
Assalamualaikum Warahmatullahi Wabarakatuh
And a very good morning.

INTRODUCTION

1.

I would like to join Dato’ Mahmud Abbas, Chairman of the Halal Development Corporation, in welcoming you to the inaugural SC-HDC Forum 2021, organised in collaboration with the Halal Development Corporation or HDC. 

2. We are honoured to partner with HDC, and I hope our collaboration today marks the start of a long-term partnership between the SC and HDC to advance the Halal economy in Malaysia.
3. The Halal economy and the Islamic capital market are natural economic partners. There are key synergies and convergence between the two since both are governed by the same principles of Shariah. The integration between the two worlds supports the potential of a holistic Halal economy that is both ethical and sustainable, and supported by end-to-end Shariah compliance throughout its value chain.
4. In the last eight years, Malaysia has ranked number one in the State of the Global Islamic Economy Report1, which monitors key indicators of Islamic economies. This positions us as the leading country across a broad number of sectors in the Islamic economic space such as Islamic finance, halal food, travel, pharmaceutical and cosmetics. Furthermore, the report highlighted multiple opportunities across Islamic finance, halal products and lifestyle sectors, with potential for further development within Malaysia’s halal industry.
5. One key driving force for our Halal economy is the Micro, Small and Medium Enterprises (MSMEs). They are also the backbone of the Malaysian economy, contributing close to 40% of GDP2.
6. However, the past one and a half years have been an extremely challenging and difficult period for these smaller businesses. The global response to the pandemic has affected all of us, but the MSMEs were one of the hardest hit segments.
7. Considering the critical role they play in our economy, we must spare no effort to ensure our MSMEs are able to pull themselves out of the current quagmire, to flourish again. If this means providing suitable capital market solutions to serve them, we must do it. If it means broadening and facilitating their access to the Islamic capital market (ICM), we must do it. Our support now will make all the difference.
8. An area that could play a critical role in the growth and success of our MSMEs is the Halal economy. Therefore, appropriate and effective measures must be put in place to support a comprehensive end-to-end Shariah-compliant ecosystem for emerging businesses in the Halal economy. This does not only mean halal products and services, but also Shariah-compliance from a “business transaction” perspective.
9. I strongly believe that with our collective effort, the MSMEs role in the Halal economy can be taken to a new level.

MARKET-BASED ISLAMIC FUND RAISING TO SPEARHEAD HALAL ECONOMY GROWTH

Ladies and gentlemen,

10. Malaysia’s Islamic Capital Market makes up more than 60% of the country’s overall capital market and plays an important role in financing the Malaysian economy. For Halal industries, Shariah-compliant financing completes their operational integrity and unlocks new sources of ethical and economically viable funding.
11. In recent years, the introduction of equity crowdfunding (ECF) and peer-to-peer financing (P2P) frameworks by the SC has provided businesses and entrepreneurs, particularly MSMEs, additional fund raising avenues through the capital market.
12. Since their introduction, alternative market-based fund raising platforms have benefited close to 3,000 MSMEs3. In fact, despite the uncertainties of 2020, total amounts raised were more than 5.5 times for ECF and 1.2 times for P2P platforms compared to the previous year.
13. The offering of Shariah-compliant solutions by these platforms have also increased. Today there are six platform operators providing Shariah-compliant offerings. More than RM1.6 million has also been successfully raised using Islamic investment notes on P2P platforms.
14. We expect this rising trend to continue with increased interest in Shariah-compliant offerings from potential issuers, as well as investors. Therefore, the SC is fully committed towards facilitating a conducive funding ecosystem for the development of the Halal economy.
15. Because of this well-developed ecosystem, Malaysian MSMEs in the Halal segment can expect to benefit from Shariah-compliant funding options that meet their business needs.
16. Given that Malaysia’s Halal economy is projected to grow to US$113.2 billion in 20304, better funding access will certainly assist Halal industry players to capitalise on opportunities for expansion. In the long term, market-based funding obligations will also provide MSMEs the necessary discipline to better manage their cash flows and finances.

SHARIAH SCREENING ASSESSMENT TOOLKIT FOR UNLISTED MSMEs

Ladies and Gentlemen,

17. As part of the SC’s ongoing efforts to enhance the ecosystem for Shariah-compliant fund raising activities, I am pleased to announce our latest initiative, Shariah Screening Assessment Toolkit for the Unlisted Micro, Small and Medium Enterprises, or in short, the “Toolkit”.
18. The Toolkit is a major initiative by the SC to provide guidance in screening the Shariah status of unlisted MSMEs. It will primarily benefit ECF and P2P platform operators as well as Shariah advisers.
19. The Toolkit includes a series of assessment questions that are based on the Shariah screening methodology for the MSMEs, which has been endorsed by the SC’s Shariah Advisory Council (SAC).
20. We anticipate that the introduction of the Toolkit will encourage more Shariah-compliant offerings on alternative market-based fund raising platforms. It will also result in more diversified Islamic investing across asset classes and economic sectors, and enable end-to-end Shariah-compliance among MSMEs in the Halal sector.

CLOSING

Ladies and gentlemen,

21. The Islamic capital market is naturally well suited to unlock the potential of the Halal economy. As a knowledge-sharing platform, this forum can assist in raising interest and awareness of ICM’s inherent strengths and benefits.
22. I hope that it will provide a useful perspective on the various alternative market-based funding opportunities available in the Islamic capital market, and encourage greater growth and participation within the halal industry.
23. With that, it is my honour to launch the Shariah Screening Assessment Toolkit for the Unlisted Micro, Small and Medium Enterprises.
   
Thank you and I wish everyone a good and productive forum.
Wabillahi taufiq wal hidayah, Wassalamualaikum Warahmatullahi Wabarakatuh.

1

Report produced by DinarStandard

2

SMEs contribution to GDP increased to 38.9% in 2019. Source: Department of Statistics Malaysia

3

As at end 2020

4

Halal Industry Master Plan 2030
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