Welcome Remarks at 13th SC-OCIS Roundtable, Oxford
Speaker: Dato’ Seri Dr. Awang Adek Hussin, Chairman, Securities Commission Malaysia Location: Oxford, United Kingdom Delivered: 10 September 2022
Note: This is the speech as drafted and may differ from the delivered version
Assalamu’alaikum warahmatullahi wabarakatuh and a very good morning.
Your Royal Highness Sultan Nazrin Muizzuddin Shah ibni Almarhum Sultan Azlan Muhibbuddin Shah Al-Maghfur-lah, Ruler of the state of Perak Darul Ridzuan, Malaysia, and Royal Patron for Malaysia's Islamic Finance Initiative,
Dr Farhan Nizami, Director, Oxford Centre for Islamic Studies,
Distinguished Participants,
Ladies and Gentlemen.
Firstly, on behalf of the Securities Commission Malaysia, I would like to extend our deepest condolences to the people of the United Kingdom on the passing of Her Majesty Queen Elizabeth II. Understandably, it is indeed a sad moment for everyone, including all of us attending this year’s SC-OCIS Roundtable. In this sobering moment, we hope we will be more guided by the Almighty to continue our efforts towards the development of Islamic Finance.
I would also like to take this opportunity to convey our deepest gratitude to Your Royal Highness Sultan Nazrin Muizzuddin Shah for gracing this Roundtable and graciously accepting to deliver the Special Address. Your Royal Highness’ unrelenting support for this Roundtable, as well as your counsel, continue to inspire positive outcomes throughout the years.
Alhamdulillah, despite this difficult moment, we are blessed with the opportunity to meet face to face again after two years of virtual conversations.
This is my first SC-OCIS event since assuming the role of SC Chairman just over three months ago. However, Islamic finance is not a new area to me, having served for seven years as the Deputy Minister of Finance and prior to that, nearly two decades at Bank Negara, Malaysia’s Central Bank – one of which was as Assistant Governor where I oversaw Islamic banking at its infancy stage. It is personally gratifying to know how far Islamic banking and Islamic finance has come since. And now I am so thrilled to be part of this prestigious Roundtable.
This year’s roundtable will focus on “Shaping a Stakeholder Economy for the Islamic Capital Market.” This is undoubtedly an appropriate topic considering the present circumstances, where we continue to address the challenges of the pandemic and transition to recovery.
At the same time, awareness of climate change and increasing social challenges have been gaining traction, with the pandemic rendering new hurdles to companies in managing their stakeholders.
These factors I believe, will push us towards reshaping the fundamentals of finance.
Maqasid Al-Shariah for the stakeholder economy
Your Royal Highness, ladies, and gentlemen
The principles of a stakeholder economy are now very much in the mind of many business leaders. The rapid spread of information has made them more aware of the social implications of their businesses and the interests of all stakeholders, including employees, customers, suppliers, and communities.
These stakeholders will in fact be a powerful force in propelling the sustainability agenda forward. In fact, the stakeholder economy is very much in line with the principles of Islamic finance. Among others, the emphasis is on the accumulation and redistribution of wealth to achieve balanced and sustainable socio-economic development.
This is also consistent with Maqasid al-Shariah which focuses on the five objectives: Protection of life, property, health, religion, and dignity.
In Islam, Maqasid al-Shariah emphasises a holistic view of life which promotes the attainment of benefits and prevention of harm. In fact, this includes inclusivity and facilitating investments for the good of the environment and society.
While the global economy is showing some signs of recovery, this recovery is still very much tentative and halting in the face of so many headwinds on the horizon. Poorer nations are grappling with deeper, longer-lasting economic devastation, which has worsened poverty and threatens to derail progress towards the UN’s Sustainable Development Goals (SDGs).
As we all know, the global economy today is facing extraordinary challenges. Just as the world starts to recover from the pandemic, we are set back by overlapping uncertainties - global inflation unseen in scale in many decades, economic growth slowdown in all major regions, and rising risk of recession in the face of continuing monetary policy tightening.
There is a dire need to explore all options to mitigate this impact and support recovery. The Islamic capital market (ICM) can play a crucial role in assisting this recovery by providing capital raising avenues to narrow the financing gaps for SDGs.
Innovation in segments such as Sustainable and Responsible Investments (SRI) sukuk and Waqf have demonstrated how the ICM facilitates fundraising for commercial purposes, while also contributing to positive environmental and societal outcomes.
Your Royal Highness, ladies, and gentlemen
Malaysia has what it takes to provide leadership in shaping the future landscape of Islamic finance. We truly believe through ICM we can find , an optimal balance between economic development and achievement of societal good.
In Malaysia, ICM accounts for over 60% of the total capital market. We are also the world’s largest sukuk market, with outstanding bonds and sukuk amounting to US$ 402 billion, representing 39% of global outstanding sukuk.
On sustainability, we have pioneered the green sukuk and the social impact sukuk through the SRI sukuk framework issued by the SC. These sukuks have had far-reaching effects in achieving both social and green goals, and have financed a variety of green, social, and sustainable projects, including projects related to quality education by Khazanah Nasional Berhad, and affordable and clean energy in Sabah and Sarawak.
Your Royal Highness, ladies, and gentlemen
The days for companies to focus solely on the shareholders are over. Today, in addition to its financial value, companies will be judged based on their customer value, people value and societal value, which are all cornerstones of a stakeholder economy.
At the SC, we have placed a strong focus on developing a stakeholder economy by mobilising more capital into sustainable businesses through SRI and ICM.
There is also a pressing need to facilitate industries and businesses in transitioning to low carbon activities, which will increase their relevance and competitiveness in a global market. Transition financing is therefore an opportunity for ICM to further broaden its range of offerings and instruments, as well as promoting greater adoption of sustainable practices.
The SRI-Linked Sukuk Framework for example, is a recent effort of the SC that will enable companies, particularly those in high-emitting industries, to access capital markets. This allows companies to meet their transition financing needs, while profiling their sustainable commitments to stakeholders. It also expands Malaysia’s SRI asset class and gives investors more investment options.
We must always be reminded that Islamic finance is not only about business and the economics of things. It is about the consolidation of solutions together in a way that would generate positive returns while ensuring adherence to Shariah and being impactful.
We believe all these efforts are in line with Malaysia’s Capital Market Masterplan 3 objectives of shaping the capital market to remain relevant to the development of the economy and its stakeholders; to be efficient in capital mobilisation; and be diversified to create value for all participants.
Given the challenging environment, it is important that we work together to achieve these desired outcomes. The SC will continue our engagements with key stakeholders, such as those at this roundtable. This is key to generating more interactions and conversations on Islamic finance. After all, this discourse has proven to be an important catalyst for innovation, growth, and ideas, which have led to many milestones achieved in the Malaysian Islamic capital market.
Last but not least, my sincere thanks to the OCIS team, in particular Dr Farhan, as well as my SC colleagues, who have been instrumental in sustaining this mutual collaboration. Using this platform for dialogue and thought leadership, we hope to make further inroads on the development of Islamic finance and sustainability agenda.
On that note, allow me to express my deepest appreciation once again to Your Royal Highness for gracing our event today and imparting your decerning wisdom and insights. I would also like to thank everyone present here today and I wish you all a meaningful discussion these two days.
The Securities Commission Malaysia (SC) was established on 1 March 1993 under the Securities Commission Act 1993 (SCA). We are a self-funded statutory body entrusted with the responsibility to regulate and develop the Malaysian capital market.
