Financial regulators devise palm oil measure
Crude Palm Oil

by FARA AISYAH / pic by MUHD AMIN NAHARUL

The collaboration between International Centre for Education in Islamic Finance (INCEIF), the World Bank and Bank Negara Malaysia (BNM) for the Environmental and Social Impact Assessment Framework (ESIAF) is currently strategising a specific assessment framework for the palm oil sector.

The particular measure is being planned based on the ESIAF, aimed to facilitate the incorporation of environmental and social impact considerations in financing and investment decisions for the palm oil sector.

The framework is part of the implementation of Valuebased Intermediation (VBI) initiative which is driven by nine members of the Community of Practitioners (CoP), namely Bank Islam Malaysia Bhd, Bank Muamalat Malaysia Bhd, Maybank Islamic Bhd, CIMB Islamic Bank Bhd, AmBank Islamic Bhd, Alliance Islamic Bank Bhd, HSBC Amanah Malaysia Bhd, Standard Chartered Saadiq Bhd and Bank Pertanian Malaysia Bhd.

INCEIF president and CEO Datuk Dr Mohd Azmi Omar said the planning for the ESIAF is currently at the initial stage.

“The first thing we need to do is to have this one guiding principle (ESIAF), then from there, we can develop specific assessment framework for each sector. The first sector we are looking at is palm oil.

“In the context of palm oil sector as an example, we are looking at the aspects of environmental social impacts that are positive, so that it will correct the behaviour of the palm oil industry in order to meet the requirements of VBI,” Mohd Azmi told reporters at the first workshop of ESIAF for VIB in Kuala Lumpur last Friday.

He said the list of following sectors to be assessed is subject to the discussions with the CoP, and it is not for the partners to decide.

INCEIF, as one of the knowledge providers, advisory and thought leadership clusters in the VBI network, will drive the overall project management and engagement, as well as facilitate research and development of the ESIAF.

Meanwhile, the World Bank will provide technical inputs from the global perspectives, contribute to the delivery of capacity building, and document the journey and experience of implementation in Malaysia as a reference for other countries.

In this collaborative effort, CoP will be involved in providing constructive insights on the feasibility of the implementation of ESIAF, while BNM will provide the overall leadership support to the collaborating entities.

BNM director of Islamic banking and takaful Mohd Zabidi Md Nor said the central bank is expected to launch the VBI scorecard and ESIAF in October this year at the Global Islamic Finance Forum 2018.

“The framework that is discussed today will be developed from now until October. Although we cannot afford to do everything that is being discussed, our priority remains on the Shariah perspective,” Mohd Zabidi told The Malaysian Reserve at the event last Friday.