Malaysia has once again been recognized as a global leader in Islamic finance according to the State of the Global Islamic Economy Report 2022.202 More than 30 established local and global fintech companies have taken root in Malaysia.203 MDEC, in collaboration with BNM, has developed the Fintech Booster Program, which provides capacity building programs to Fintech companies based in Malaysia to develop products and services. significant innovations. improving their understanding. legal, regulatory and compliance requirements. The fintech booster helps domestic or foreign start-ups comply with legal requirements and choose their business model.204 In December 2017, Permodalan Nasional Bhd issued the first tranche of RM 690 million under its RM 2 billion program and the 15-year Merdeka ASEAN Green SRI Sukuk program. It was the first green sukuk to be recognized under both the SC SRI Sukuk and ASEAN-GBS.168 In addition, tax incentives were announced in July 2017 to attract green emitters that included a tax deduction until 2020 on the issuance costs of approved, approved or submitted to the SC SRI Sukuk, 169 in addition to measures previously introduced in the 2014 budget.170 Malaysia`s 2018 budget included a number of tax incentives, including an income tax exemption for SRI green sukuk subsidies, to promote the issuance of SRI green sukuk in Malaysia. The SC will provide a grant of 6 million green SRI sukuk through the Capital Market Development Fund to finance the external audit expenses of a green SRI sukuk issuer.171 As of December 2020, Malaysia had issued 13 green SRI sukuks worth RM 5.4 billion, of which RM 3.1 billion has been doubly recognized under the ASEAN Green Bond Standards and the Bond Standards. ASEAN Sustainability. 172 including Edra Solar Sdn Bhd173`s first ASEAN Sustainability SRI Sukuk to finance a solar installation project which is Malaysia`s first issue to meet the collective requirements of the SC SRI Sukuk Framework, ASEAN GBS, ASEAN Standards on Social Bonds and Green Bond Principles, globally recognized social bond principles and sustainable bond guidelines. The project is expected to have positive environmental and social impacts that are also in line with the United Nations Sustainable Development Goals.174 Recently, the ASEAN Green SRI Sukuk edition of reNIKOLA Solar Sdn Bhd, which is part of the RM390 million Islamic medium-term note program, was classified as Level 1 environmental benefits. The proceeds will be used to partially finance, partially or both the development costs of three solar PV plants in Malaysia with a cumulative installed capacity of 64 MWac. The Tier 1 Environmental Benefits rating recognizes clean renewable energy generated by solar installations.175 Engku Ali, E.R.A.
and Oseni, et al. (2017), “Towards an effective legal and regulatory framework for Islamic financial transactions: Major initiatives of the Central Bank of Malaysia,” International Journal of Law and Management, Vol. 59, No. 5, p. 652-672. doi.org/10.1108/IJLMA-04-2016-0038 In April 2021, the government successfully priced the world`s first sovereign dollar-denominated sustainability sukuk by issuing $800 million worth of 10-year trust certificates and a $500 million trust certificate over 30 years. The proceeds will be used for eligible social and green projects aligned with the United Nations Sustainable Development Goals agenda. This edition of the Sukuk highlights the government`s efforts to fight climate change and accelerate the transition to a more resilient and inclusive economy, in line with the government`s 2030 Shared Prosperity Vision. This sukuk is unique in that its underlying assets are sustainable assets as they are vouchers that represent the right to travel on Malaysia`s tram, transit and KL monorail networks. As the first government bond with such assets in a sukuk structure, this issue sets a new benchmark and demonstrates Malaysia`s global leadership in Islamic finance, strengthening the country`s position as the world`s largest sukuk market. It was also noted that the framework is aligned with the four components of the ASEAN Social Bond Principles, Green Bond Principles and Sustainability Standards.179 The role of fintech in Islamic finance as a key factor for future business and as an intermediary for an end-to-end automated Islamic banking system for Shariah-compliant banking transactions in accordance with the digitalization of the financial sector under the FSB. To this end, six Islamic banking institutions in Malaysia collaborated in February 2016 to launch the Investment Account Platform,181 the first bank-brokered FinTech platform that combines Islamic banking and technology to channel investors` funds to Shariah-compliant business enterprises.182 In this context, BNM and SC have launched initiatives to promote fintech development in Malaysia.
as shown below. The Capital Markets and Services Act of 2007 (CMSA) provides a unified framework governing the licensing of conventional and Islamic capital market services, market conduct and supply, and the issuance of securities, including unlisted Islamic securities or sukuk, with the exception of specific laws, regulations and guidelines that apply exclusively to the operation of the Islamic capital market. This was an important step in SC`s ongoing efforts to strengthen the capital markets framework. According to IFSA, all companies engaged in takaful trade or takaful international trade must be in possession of a valid license issued by the Minister on the recommendation of BNM.
