Malaysia the prime issurer of sustainability sukuk in Asean with US$3.9bil total issuance

KUALA LUMPUR: Malaysia leads in sustainable and responsible investing (SRI) sukuk issuance among the ASEAN6 countries, accounting for US$3.9 billion (US$1=RM4.19) of issuance value or 56 per cent of the total ASEAN SRI sukuk issuance as of November 2021, according to a recent research.

The research was released by Ernst & Young Consulting Sdn Bhd and Capital Markets Malaysia’s Sustainable Investment Platform (SIP) on the growth trend of sustainable and responsible investing (SRI) in Malaysia and its five ASEAN neighbours. The five countries are Indonesia, the Philippines, Singapore, Thailand and Vietnam.

The publication offers insights into how the ASEAN6 countries are embracing SRI and environmental, social and governance (ESG) practices amid the evolving global finance and investment landscape, and are supported by their respective national policies.

"We are seeing Malaysian corporates and organisations, along with their ASEAN peers, significantly stepping up their adoption of ESG strategies and practices. These actions will enhance their resilience and long-term sustainability,” Malaysia managing partner, Ernst & Young PLT Datuk Abdul Rauf Rashid said in a statement.

According to the publication, ASEAN6 regulatory authorities are developing policies and action plans in line with global policy developments and initiatives to achieve the Sustainable Development Agenda by 2030.

These include sustainable agendas/green plans, sustainable investment, power or energy development plans and climate change adaptation or mitigation plans.

Currently, over two thirds (68 per cent) of the total ASEAN6 bonds and sukuk are focused on investments in three key sectors, namely energy (49 per cent), green buildings (10 per cent) and transportation (nine per cent).

By 2030, the ASEAN green/low-carbon economy is estimated to provide potential annual business opportunities of nearly US$1 trillion. Meanwhile, the region’s renewable energy sector is anticipated to attract an average investment of US$50 billion per annum from 2025 to 2030.

Meanwhile, Lya Rahman, chairperson of the SIP’s steering committee, remarked the swift growth of ASEAN sustainable bonds and sukuk, coupled with the growing focus on the green sector, underscores ASEAN6’s firm commitment to the fulfilment of the global sustainable agenda by 2030.

"Growth prospects are bright given investors’ increasing demand for sustainability-themed products, particularly with rising concerns on the impact of climate change.

"Malaysia’s focused efforts in this investment area are poised to maintain its growth trajectory in sustainable sukuk issuance,” she said.

Developments in the SRI arena have catalysed the exponential growth of ASEAN sustainable bonds and sukuk.

Between 2016 to 2020, the ASEAN6 markets saw significant increases, at 198 per cent compound annual growth rate (CAGR), in sustainable bonds and sukuk issuance for financing growth aligned with ESG principles, with an issuance value estimated to have reached US$29.8 billion as of November 2021.

Correspondingly, sustainability-themed shariah-compliant sukuk grew exponentially higher, at 278 per cent CAGR, and is estimated to have reached US$7billion in November 2021. - Bernama
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E&Y , SRI , sukuk , Malaysia , ESG , SIP


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