Malaysia’s 1st green sukuk under SC’s SRI sukuk framework

by TMR / Pic by MUHD AMIN NAHARUL

Securities Commission Malaysia (SC) yesterday announced the issuance of Malaysia’s first green sukuk under its Sustainable & Responsible Investment (SRI) sukuk framework.

“The launch of Malaysia’s first green sukuk marks another significant milestone in product innovation that strengthens Malaysia’s position as a leading Islamic finance marketplace, as well as its value proposition as a centre for sustainable finance,” said SC chairman Tan Sri Ranjit Ajit Singh.

He said there is a significant opportunity from strong global interest in green financing where innovative fundraising instruments like green and SRI sukuk are a viable solution to address global needs for green and other forms of sustainable and responsible financing.

Several incentives are provided to promote green sukuk as a fundraising channel, incentives.

This includes tax deduction until year of assessment 2020 on issuance costs of SRI sukuk approved or authorised by or lodged with the SC.

Tax incentives are also awarded for green technology activities in energy, transportation, building, waste management and supporting services activities and access to financing incentives under the Green Technology Financing Scheme with total funds allocation of RM5 billion until 2022.

SC said to eligible for tax deductions under SRI sukuk incentives, issuers must ensure proceeds raised are used to fund eligible SRI projects in the natural resources, renewable energy and/or energy efficiency sectors.

The framework underlying this first green sukuk is the result of collaboration between the SC, Bank Negara Malaysia and the World Bank Group.

“With the successful development of the framework for the first green sukuk, Malaysia is playing a pioneering role in harnessing capital markets, and in particular Islamic finance, for climate friendly investments,” said Faris Hadad-Zervos, World Bank representative to Malaysia.

“This is a crucial step in financing the country’s infrastructure investments and the World Bank Group is pleased to be a close partner with Malaysia in developing this innovative approach to climate finance.

“We congratulate Malaysia on this historic achievement.”