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SC Partners IsDB to Advance Islamic Capital Market, Social Finance

RIYADH: The Securities Commission Malaysia (SC) has inked a Memorandum of Understanding (MOU) with the Islamic Development Bank (IsDB) Group, setting the stage for enhanced collaboration in the Islamic capital market (ICM) and expanding the scope of Islamic fintech and social finance, with a particular focus on waqf.

MOU signing between the Securities Commission Malaysia (SC) and the Islamic Development Bank (IsDB) Group

The signing ceremony of this groundbreaking MOU was witnessed by the Honorable Prime Minister of Malaysia, Dato’ Seri Anwar Ibrahim, and the President and Chairman of IsDB, His Excellency Dr. Muhammad Al Jasser. This marks the inaugural agreement of its kind between Malaysia’s capital market regulator and the foremost multilateral development bank of the Global South.

 

Dato’ Seri Dr. Awang Adek Hussin, Chairman of SC, and Dr. Zamir Iqbal, Vice President of Finance and Chief Financial Officer of IsDB, sealed the MOU on the sidelines of the IsDB Annual General Meeting 2024 in Riyadh.

 

The genesis of this collaboration traces back to a meeting in March 2023 between Dato’ Seri Anwar and H.E. Dr. Muhammad Al Jasser, where they laid the groundwork for Malaysian regulators, authorities, and businesses to collaborate closely with IsDB. The envisioned areas of cooperation encompass the development and pilot testing of innovative Islamic finance products, bolstering the halal industry, and fostering support for micro, small, and medium enterprises (MSMEs).

 

Outlined within the MOU are several key areas of collaboration, including the facilitation of innovation in Islamic fintech, the promotion of Islamic social finance, and the encouragement of investment inflows, among others. Capacity building, knowledge sharing, and joint technical projects pertaining to ICM are also on the agenda, with the potential for mutual benefit to other IsDB member countries.

 

Dato’ Seri Dr. Awang Adek expressed optimism about the synergistic collaboration, heralding it as a historic milestone for both SC and IsDB. He emphasized the intent to expand Islamic fintech and explore new markets while seizing opportunities in social finance, particularly in waqf asset development, leveraging their respective expertise in capital markets and financial development.

 

Dr. Muhammad Al Jasser highlighted the MOU’s significance in enhancing Islamic fintech, social finance, and attracting foreign investment in private markets. This partnership, he stressed, will not only bolster Islamic capital markets in Malaysia but also across IsDB Member Countries, with a priority focus on supporting MSMEs and private markets for economic empowerment.

 

Aligning with the Capital Market Master Plan 3 (2021 – 2025), the MOU reflects strategic initiatives for the Malaysian ICM, including broadening its outreach to the broader economy’s stakeholders and fostering collaboration and innovation for sustainable growth.

 

In furtherance of these objectives, the SC, along with its affiliate Capital Markets Malaysia, has engaged with stakeholders in Abu Dhabi, Dubai, and Riyadh, advocating for the impact of ICM and bolstering Malaysia’s global thought leadership. Sharifatul Hanizah Said Ali, Executive Director of Islamic Capital Market at SC, has underscored the potential of ICM in structuring innovative financing instruments to advance social impact investing, sukuk issuances, and Islamic asset management.

 

In 2023, the Malaysian ICM witnessed a growth of 4.5% to RM2.4 trillion, with sukuk outstanding increasing by 7.4% and Shariah-compliant equities by 1.5%. Malaysia’s leadership in ICM, particularly in sukuk outstanding and Islamic fund management, has been consistently recognized in global indices, including the Islamic Fintech Index, the Global Islamic Economy Indicator, and the global Islamic Finance Development Indicator, for the past decade.

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