The Securities Commission Malaysia (SC) on January 21 announced the expansion of its Green Socially Responsible Investment (SRI) Sukuk Grant Scheme to encourage more companies to finance green, social and sustainability projects through SRI sukuk and bonds issuance.
With this expansion, the grant is now renamed as SRI Sukuk and Bond Grant Scheme and applicable to all sukuk issued under the SC’s Sustainable and Responsible Investment Sukuk Framework or bonds issued under the Asean Green, Social and Sustainability Bond Standards (Asean Standards).
With a size of 6 million ringgit (US$1.48 million), the Green SRI Sukuk Grant Scheme was established in 2018 to assist issuers in defraying up to 90% of the external review costs for green SRI sukuk. Thus far, it has benefitted eight issuers involved in renewable energy, green buildings and sustainable projects.
“As a regional leader in sustainable and responsible investment, Malaysia’s capital market offers companies efficient and reliable access to financing of sustainable projects that can positively contribute to the environment and society, in alignment with the country’s commitment to the Sustainable Development Goals and the climate change agenda,” says SC chairman Datuk Syed Zaid Albar.
Already recognized as a pioneer in Islamic finance and more recently for climate-friendly sukuk offerings, Malaysia accounted for 19% of sukuk and bonds issued under the Asean Standards. As of December 2020, 5.4 billion ringgit SRI sukuk have been issued under the SRI Sukuk Framework, out of which 58% or 3.1 billion ringgit were also recognized under the Asean Standards, and another 635 million ringgit bonds issued under the Asean Standards. This signifies the demand for an asset class that meets the criteria for Shariah as well as sustainable and responsible investing.
The SRI Sukuk and Bond Grant Scheme is now open for application where eligible issuers can claim the grant to offset up to 90% of the external review costs incurred, subject to a maximum of 300,000 ringgit per issuance. The scheme is administered by Capital Markets Malaysia, an affiliate of the SC.
As announced in Budget 2021, income tax exemptions are provided for the scheme recipients for a period of five years until 2025.
Issuers are encouraged to submit application for the scheme, aimed at lowering the cost of issuances and encouraging continuous issuances of SRI sukuk and bonds in advancing Malaysia as a regional sustainable finance hub.