KUALA LUMPUR: The Securities Commission Malaysia (SC) expects to launch guidance on principles-based Maqasid al-Shariah compliance by the end of this year.
“We plan to launch guidance on the principles-based Maqasid al-Shariah compliance before year-end … and this could well be the first in the world. This will allow options for investors globally to invest not only in shariah-compliant products in Malaysia, but also those aligned with Maqasid-al-Shariah,” said SC Malaysia and Securities Industry Development Corp (SIDC) chairman Datuk Seri Dr Awang Adek Hussin in his speech titled “Reshaping Markets & Finance: Thought Leadership, Technology and Talent as Powerful Levers of Change” today.
Given Malaysia’s position as a global leader in Islamic finance, he said the country must leverage its thought leadership, push boundaries and continue to broaden the spectrum of traditional and alternative products.
“Malaysia, as a major player in Islamic finance, has been at the forefront in developing the sustainable and responsible investing segment. Significant commonalities between shariah and ESG, such as social responsibility, inclusiveness, equitable sharing of risks, fit well with the national agenda. This has resulted in pioneering regulatory structures, including SRI Sukuk Framework, SRI-Linked Sukuk Framework and Waqf-Featured Fund Framework,” said Awang Adek.
He said Malaysia must grow its shariah-compliant products, ESG (environmental social and governance) products and sustainability financing, as well as push for stronger growth in the private market, in order to attract interest from foreign investors.
He added that the country is facing strong headwinds and challenges, despite doing well in the past, as the importance of its market internationally has waned due to the emergence of new regional markets.
Awang Adek noted that the Malaysian capital market has grown more than five times, from RM0.7 trillion in 1993 to RM3.6 trillion as of June 2023. The number of public-listed companies has increased to nearly 1,000 and its corporate bond market is recognised as a developing market by international institutions such as the World Bank.
In order to attract ESG-focused investors, Awang Adek said, the country needs to increase ESG products and sustainability financing. He pointed out that Malaysia is ahead of many regional peers in terms of sustainability disclosures by its public listed companies, and said that now is the time “to work seriously towards adopting International Sustainability Standards Board standards, which are expected to be effective next year”.
“Given the active development of renewable energy domestically and the introduction of a carbon market by Bursa Malaysia, we should aspire to be a regional leader in ESG products and ESG-related services,” he added.
Awang Adek said there is a need to push for stronger growth in the private market, and its growth through venture capital, private equity, equity crowdfunding as well as peer-to-peer financing, which has been encouraging. He believes that it must continue to be encouraged to assist small and medium enterprises gain access to suitable financing for growth and expansion.