Wednesday, February 19, 2020

Malaysia launches the world’s first green Islamic bond

Must Read

Chinese Firms Race to Contain Job Losses as Coronavirus Batters Economy

BEIJING—When cameraman Mark Xia returned to his job this month after the Lunar New Year holiday, the Shanghai...

Trump’s trade deal poses new dangers to Southeast Asia

Author: Calvin Cheng, ISIS Malaysia After two years of alternating between tense escalation and fleeting periods of calm, the United...

Coronavirus: China reports work-related infections as factori…

Cracks have appeared in China’s eagerness to resume economic activities amid the coronavirus outbreak, with a number of work-related...

APRIL International Care revamps MyHEALTH Hong Kong

APRIL International Care is unique in offering choice in how care is delivered, thus empowering clients to contain costs and ultimately keep premiums down.

Business must brace for the new national security economy

Author: Brad Glosserman, Tama University Relations between the United States and China will continue to deteriorate despite the phase one...
The green sukuk, or Islamic bond, is a big step forward to fill gaps in green financing. Proceeds are used to fund environmentally sustainable infrastructure projects such as solar farms in Malaysia.
Photo: Aisyaqilumar/bigstock

Climate change is expected to hit developing countries the hardest. Its potential effects on temperatures, precipitation patterns, sea levels, and frequency of weather-related disasters pose risks for agriculture, food, and water supplies. At stake are recent gains in the fight against poverty, hunger and disease, and the lives and livelihoods of people in developing countries.
 
World Bank green bonds help raise awareness among investors and the financial community about how developing countries can take action on climate change. We are advising governments on the development of green bond markets based on our own experience of issuing green bonds and the knowledge we have due to our position as a market leader in this space.
 
Last year, the World Bank Group Global Knowledge and Research Hub joined a Technical Working Group with Bank Negara Malaysia and the Securities Commission supporting the Malaysia Green Finance Program, leveraging from our experience and expertise in green financing. The program aims to encourage investments in green or sustainable projects through the development of green Islamic finance markets initially in Malaysia, and subsequently, in the ASEAN region.
 
Today, the program has supported the launch of the first green sukuk in the world on June 27, 2017. The sukuk is a green Islamic bond where the proceeds are used to fund a specific environmentally sustainable infrastructure project, such as the construction of renewable energy generation facility.
 
Green sukuk have the potential to further broaden this market as well as to help bridge the gap between the conventional and Islamic financial worlds. The sukuk should be attractive to conventional investors if they offer reasonable risk-adjusted returns and are properly marketed. A sukuk that meets those criteria and provides funding for an environmentally sustainable project could be particularly attractive to environment-focused investors for two principal reasons.
 
First, sukuk provide investors with a high degree of certainty that their money will be used for a specific purpose. In order to comply with the underlying Shari’ah principles, the funds raised through the issue of a sukuk must be applied to investment in identifiable assets or ventures. Therefore, if a sukuk is structured to provide funds for a specified infrastructure project, such as a renewable energy project, there is little chance the investors’ money will be diverted and used for another purpose.
 
Second, many more environment-focused investment products exist on the equity side of the capital markets than on the fixed income side. Since most environmentally sustainable investors want to know precisely how their money will be used, bonds that are general obligations of an issuer have limited appeal unless all of the activities of the issuer meet the investor’s…

Source link

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

Chinese Firms Race to Contain Job Losses as Coronavirus Batters Economy

BEIJING—When cameraman Mark Xia returned to his job this month after the Lunar New Year holiday, the Shanghai...

Trump’s trade deal poses new dangers to Southeast Asia

Author: Calvin Cheng, ISIS Malaysia After two years of alternating between tense escalation and fleeting periods of calm, the United States and China reached a...

Coronavirus: China reports work-related infections as factori…

Cracks have appeared in China’s eagerness to resume economic activities amid the coronavirus outbreak, with a number of work-related cases reported.Gree Electric, the country's...

APRIL International Care revamps MyHEALTH Hong Kong

APRIL International Care is unique in offering choice in how care is delivered, thus empowering clients to contain costs and ultimately keep premiums down.

Business must brace for the new national security economy

Author: Brad Glosserman, Tama University Relations between the United States and China will continue to deteriorate despite the phase one trade deal signed in January...

More Articles Like This

- Advertisement -
Thailand Business News