Following the success of its Sukuk Prihatin initiative to combat the impact of COVID-19, the Malaysian government has turned to the Islamic capital market once more, this time to focus on the country’s sustainability agenda. NESSREEN TAMANO writes.
In his speech unveiling Malaysia’s new economic stimulus package, the Strategic Programme to Empower the People and Economy, or Program Strategik Memperkasa Rakyat dan Ekonomi (also known as PEMERKASA), Prime Minister Muhyiddin Yassin confirmed the government’s plan to issue a sustainable Sukuk facility of not less than US$1 billion — the first sovereign sustainability Sukuk to come out of the country.
Proceeds from the Sukuk facility, which is aimed at supporting Malaysia’s ambition of becoming a sustainable financial hub, will fund programs and projects that feature elements of sustainability, as well as address the socioeconomic impact of the ongoing coronavirus crisis.
Plans for the issuance of the debut sustainable Sukuk were first announced in the budget proposal last year to support Malaysia’s environmental and social initiatives in 2021. The government has held a strong stance in aligning sustainable finance with the principles of Islamic finance, with a total of 11 green and sustainable corporate Sukuk issuances amounting to RM5.02 billion (RM1.22 billion) as at December 2020.
A notable issuance similar to Malaysia’s planned sustainable Sukuk is the IsDB‘s sustainable Sukuk worth US$1.5 billion issued in June 2020 to finance the economic recovery of its member countries in the face of the pandemic.