SRI SUKUK ISSUANCES RISE NINEFOLD TO RM11.9 BLN IN 2024

KUALA LUMPUR, March 24 (Bernama) – Malaysia saw a significant rise in sustainable and responsible investment (SRI) sukuk issuances last year, reaching RM11.9 billion — an almost ninefold increase since its introduction in 2017— thanks to a supportive regulatory framework.

In its Annual Report 2024, Bank Negara Malaysia (BNM) said the SRI Sukuk market is poised for further growth, driven by priorities in energy transition, social inclusivity, and sustainability under the MADANI economy framework.

It said this agenda is closely aligned with Malaysia’s 12th Malaysia Plan (2021–25), particularly Theme 3, which emphasises advancing green growth, enhancing energy sustainability and transforming the water sector.

"These strategic focus areas bolster the ongoing push for sustainable financing, positioning SRI Sukuk as a key instrument in achieving the country’s long-term sustainability goals. Within this supportive framework, Malaysia’s ecosystem is well-positioned to facilitate SRI sukuk issuances.

"Malaysia is also well-positioned to support the growth of the green sukuk market domestically and globally.

“Various efforts are now being undertaken by BNM and market participants to scale up green sukuk adoption and position the country as a gateway for Islamic finance," said the central bank.

Meanwhile, BNM said it will continue to promote the issuance of green and SRI sukuk to meet the expanding financing needs in the renewable energy, biodiversity and public infrastructure projects, in line with the projects identified in the National Energy Transition Road.

Regionally, BNM said Malaysia has been instrumental in establishing the ASEAN Green Bond Standards, ensuring alignment with international best practices while addressing regional needs.

Through collaboration with the ASEAN Capital Markets Forum, the country also supports efforts to enhance regional capital markets by focusing on sustainable finance, responsible investment and strengthening environmental, social and governance (ESG) disclosure frameworks.

This will eventually position Malaysia as a leader in advancing responsible investment practices within ASEAN’s sustainable finance framework, said BNM.

"Furthermore, BNM continues to support the issuance of ringgit-denominated sukuk by residents and non-residents for use in Malaysia through the facilitative foreign exchange policy.

“A key objective is to scale up the issuance of SRI instruments to finance climate resilience, energy efficiency and social impact projects,” it said.

The central bank added that this commitment underscores Malaysia’s leadership role in fostering innovation and growth in the green finance sector within the ASEAN region.

Meanwhile, BNM said the introduction of the Islamic Collateralised Funding Policy Document (ICF PD) in June last year resulted in the volume of Islamic interbank repo transactions surging to RM42.6 billion in 2024 from RM12.6 billion in 2023, indicating strong market adoption and growing liquidity.

The ICF PD provides a structured framework and standards for Islamic repo transactions, thereby improving the overall functioning of the Islamic Interbank Money Market (IIMM).

BNM said the standardisation of Islamic repo transactions within the IIMM has promoted the efficiency and activity of the interbank market which facilitates short-term funding and liquidity management among the Islamic financial institutions in Malaysia.

-- BERNAMA