Global acceptance of Islamic investment as part of the sustainable investment universe has created significant opportunity for Islamic finance to catalyse the development of innovative funding instruments that support global demand for sustainable development projects.
The use of sukuk (Islamic bonds) as such a funding instrument has had widespread appeal in Malaysia following the issuance the Sustainable and Responsible Investment (SRI) Sukuk Framework by the Securities Commission Malaysia in 2014. The Framework has paved the way for Malaysian issuers to issue SRI sukuk in the form of green, sustainable and social sukuk issuances. Cumulatively as of January 2021, 16 SRI sukuk have been issued in Malaysia, making the country largest issuer of sustainable sukuk todate in terms of number of corporate issuances.
SRI Sukuk and Bond Grant Scheme
As part of ongoing efforts to encourage green financing the SRI Sukuk and Bond Grant Scheme was established by the Securities Commission Malaysia. The Scheme, administered by Capital Markets Malaysia, is to cover the costs incurred by issuers for independent expert review of sustainable sukuk issuances under the SC’s SRI Sukuk Framework and bond issuances under the ASEAN Green, Social and Sustainability Bond Standards.
Tax Deduction on SRI Sukuk and Bond Issuances
A tax deduction is applicable for expenditures from the issuance of all types of bonds and sukuk that achieve green, social and sustainable standards in Malaysia that are approved by the Securities Commission Malaysia, up till year of assessment 2025.