Petaling Jaya: Malaysia has seen an increase in sustainable and responsible investment sukuk issuance in the renewable energy sector, contributing to a total outstanding bond and sukuk market of RM2 trillion as of October 2023.
Securities Commission Malaysia (SC) executive chairman Datuk Seri Awang Dr Adek Hussin said more than 50% of the total SRI sukuk issuance in Malaysia was from the renewable energy sector.
“As of October 31, 2023, the total amount outstanding is RM2 trillion, and (the bond and sukuk market) accounts for more than 50% of Malaysia’s capital market,” he said in a report on the Malaysian bond market by virtual Malaysian rating agency BHD. I mentioned this in a lecture at . Sukuk Conference 2023: Sustainable transition to a greener economy today.
This year, up to October, three SRI Sukuk with a total program value of RM2.2 billion were launched.
Awang Adek said, “TNB Power Generation’s recent issuance of RM2 billion SRI Sukuk for a renewable energy terminal stands out as the largest ever, and is a commitment to fund projects that contribute to sustainability and green energy. “This highlights Malaysia’s efforts.”
He added that Malaysia is the largest sukuk market accounting for 35% of the world’s sukuk outstanding, surpassing Saudi Arabia and Indonesia.
“The country also continues to be a regional leader in sustainable and responsible investment sukuk,” he said.
Awang Adek said Malaysia accounted for 27% of Asean’s total green social sustainability bond and sukuk issuance of US$41 billion (RM191.8 billion).
He said, “Since the launch of the SRI Sukuk Framework in 2014, the cumulative issuance of SRI Sukuk has reached approximately RM27 billion, of which over RM18 billion has been issued under the SRI Sukuk Framework and the ASEAN Green, Social and Sustainability Bond Standard. It is recognized based on the
Awang Adek highlighted that Malaysia will issue its first sovereign USD sustainability sukuk in 2021, with a bid to bid ratio of 6.4x, making Malaysia a regional leader in SRI sukuk.
“This was despite a significant increase in interest rates globally and the gradual reopening of economies,” he said.
However, Awang Adek said that to achieve net-zero emissions by 2050, the world would need around US$4 trillion in annual clean energy investment by 2030, and Malaysia alone would need around US$1 trillion in annual clean energy investment by 2050. He said RM300 billion would be needed.
“Given the huge capital needs, the financial sector, and capital markets in particular, must continue to facilitate financing and investment in these key areas to support government priorities.
He added: “Malaysia’s bond and sukuk market is one of the most developed and largest in the region and is well-positioned to provide critical financing for productive and socially responsible initiatives. It should be,” he added.
