Regulators, players mull innovative frameworks for better resilience

This can range from funding mechanism like sukuk to widening investment opportunity to cater to the demands of investors who are becoming a lot more selective in their choices.

SC

KUALA LUMPUR: Regulators and market participants in the financial markets in Malaysia are considering innovative frameworks and solutions to address the funding gap to transition to a more resilient and inclusive economy.

Securities Commission (SC) Malaysia market development executive director Salmah Bee Mohd Mydin said as financial markets are the key to a sustainable future, it could determine the direction of economic development and significantly influence the adoption of green activities into the mainstream.

“This can range from funding mechanism like sukuk to widening investment opportunity to cater to the demands of investors who are becoming a lot more selective in their choices.

“We need to facilitate more businesses to transition to lowcarbon and more market-based solutions, and this is what the SC is actively pursuing, not only as part of their transition journey but also to come out of the health crisis,” she said in a virtual session titled ‘Sustainable Capital Market Product Innovation Roundtable’ at the Sustainable Finance Week (SFW) Virtual Conference at Expo 2020 Dubai.

Salmah said one of the key strategies for a sustainable and responsible investment (SRI) is to leverage the synergies between Islamic capital market and SRI.

One example, she said, was the development of the SRI support framework which had resulted in the issuance of the world’s first green sukuk in Malaysia in 2017.

“That framework has gone through enhancements and we continue to ensure that it is aligned with international standards,” she said.

Salmah added that the SC is also focusing on the need to have more developments and innovations in the private equity market, angel investing, and in the retirement space.

Meanwhile, in a separate session titled, ‘The Transition Revolution’, CIMB Islamic Bank Bhd chief executive officer Ahmad Shahriman Mohd Shariff said in pushing the sustainability agenda, the banking sector needed to accelerate capacity building in order to produce a meaningful, sizeable amount to be placed in the market.

“For example, some of the technology or free to use technology that can be used to do measurement (of sustainability efforts) and so on or applications, can it also be used by retail, small and medium enterprises and what not?

“For banks, we can also use these tools to measure because now the question is how do we measure and create or collect all the information required to see whether what we are doing has an impact or not,” he said.

Ahmad Shahriman also said that best practices among the banking institutions and even companies should be shared through a platform to achieve a common goal on sustainability, besides providing incentives as it would help to address some of the cost issues for all market segments.