BUSINESS

SC: ICM OFFERINGS TO BE EXPANDED

21/09/2021 11:06 AM

KUALA LUMPUR, Sept 21  -- Islamic capital market (ICM) offerings will be expanded to better support the needs of stakeholders of the economy, especially on the Shariah-compliant funding needs of micro, small and medium enterprises (MSMEs) in the halal sector and Shariah-compliant responsible investment (SRI).

In its Capital Market Masterplan 3 report released today, the Securities Commission Malaysia (SC) revealed that the halal economy, which mostly comprises MSMEs, contributes to approximately seven per cent of the national gross domestic product (GDP).

To establish and develop an ecosystem conducive to businesses in the halal economy, the capital market regulator said it will collaborate with relevant stakeholders focusing on Shariah-compliant funding models and mechanisms. 

“This includes developing broad Shariah guidance to facilitate assessments of the Shariah-compliant status of unlisted companies for industry reference. 

“Ongoing efforts to raise awareness of alternative Islamic fundraising activities and efforts to broaden Islamic offerings through crowdfunding platforms will also be intensified,” it said. 

The SC noted that the ICM accounts for more than 60 per cent of the Malaysian capital market as it has evolved from largely focusing on basic Shariah-compliant products and services as alternatives to conventional products and services to offering more comprehensive financial solutions for different market segment needs.

The ICM fundraising offerings in venture capital (VC), private equity (PE), equity crowdfunding (ECF) and peer-to-peer (P2P) financing can complement the banking sector and fill the funding gaps to support the growth of MSMEs in the halal sector, it said. 

Along with the growing interest to invest responsibly, efforts will be made to enhance investor access to Shariah-compliant companies with good Environmental, Social, and Governance (ESG) practices to encourage companies to take into greater consideration the needs of broader stakeholders, including people or communities and the environment. 

“Guidance will be provided to incorporate Shariah requirements and ESG standards for investors seeking such investments as well as companies aspiring to adopt ESG practices.

“This guidance will leverage existing Shariah screening methodologies and internationally-recognised positive screening methodologies available in the market,” it said. 

For greater impact on the socio-economic development in Malaysia, the SC will explore greater use of the ICM framework as a reference point and its products and services as funding sources for further development of the Islamic social finance sector. 

“Moving forward, there are opportunities for impact assessments to be integrated with Islamic social finance instruments to enable measurable impact investments in the areas of socio-economic development.

“This ensures that investors will be able to measure whether the capital invested has achieved its desired impact objectives,” it said.

As Malaysia is seen by many as a global thought leader in Islamic finance, its role is expected to evolve in accordance with the emerging trends in the capital market.

This includes harnessing technological advancements to collaborate and innovate to remain relevant on regional and global platforms as well as pave the way on how ICM can better enable the stakeholder economy and sustainable goals, said the SC.

Thus, strategic thought leadership promoting greater ICM contribution towards Maqasid al-Shariah will be developed, focusing on areas such as social finance, impact investing, SRI as well as Islamic fund and wealth management, it said.

It noted that capacity building is another key area for the sustainable growth of ICM in Malaysia, which will be strengthened through various upskilling and reskilling programmes to enable the development of professional expertise. 

In the area of Islamic wealth management, efforts will be intensified to develop capabilities and talents across the value chain of Islamic wealth management through collaborations with regulators, industry players, training and academic institutions, professional bodies as well as other relevant stakeholders. 

According to the report, financial technology will be leveraged as an enabler for innovative solutions, focusing on the halal economy, SRI and Islamic social finance to enable further growth and expand ICM offerings.

“The digital solutions will facilitate connectivity by allowing issuers, investors and intermediaries to access existing and new markets in a more efficient and cost-effective manner, thus spurring the growth of the industry.

“Key initiatives include advancing innovation by capitalising on existing frameworks and through closer collaboration with relevant and key stakeholders,” it said. 

-- BERNAMA


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