KUALA LUMPUR: Financial technology (fintech) will be leveraged as an enabler for innovative solutions focusing on the halal economy, socially responsible investing (SRI) and Islamic social finance to further grow the Malaysian Islamic capital market (ICM), says the Securities Commission Malaysia (SC).
SC Islamic capital market development executive director Sharifatul Hanizah Said Ali said the regulator also expects greater adoption of digitisation and technology to broaden and accelerate the capacity for stakeholders to enhance the Islamic finance ecosystem.
“The digital solutions would facilitate connectivity by allowing issuers, investors, and intermediaries to access existing and new markets in a more efficient and cost-effective manner, thereby accelerating the industry’s growth,” she told Bernama via an email interview recently.
Sharifatul Hanizah said post COVID-19, the small and medium enterprise (SME) industry had acknowledged the importance of going digital and utilising fintech to ensure continuous operationalisation of their business activities, as well as to gain access for capital to maintain and expand their business.
“Raising capital through Shariah-compliant means is especially essential for SMEs in the halal industry, which comprises a large percentage of SMEs in Malaysia,” she said.
As for the bottom 40 per cent of the household income group (B40), the youth and underprivileged, Sharifatul Hanizah said the adoption of fintech and Islamic fintech had provided them with new ways to generate income after being displaced from their job, or to regain some financial control with easier and more effective money management with increased financial literacy.
Noting the importance of fintech in serving the B40 and SMEs, she said the SC is focusing on expanding ICM offerings to enable greater connectivity, accessibility and inclusivity for all market players, particularly the underprivileged segments.
“To achieve this, the SC will increase its efforts on the development of the Islamic social finance sector which has been instrumental in addressing poverty alleviation and socio-economic development,” she said.
She said today, additional sources of funding for Islamic social finance are enabled by capital market instruments such as SRI sukuk and waqf-featured funds.
On the third Capital Market Masterplan (CMP3) for 2021-2025 launched in September 2021, Sharifatul Hanizah said innovation and fintech are among the key areas outlined in the five-year plan.
“To enable further growth and expand ICM offerings, fintech will be leveraged as an enabler for innovative solutions.
“Awareness and active participation from both the demand and supply side of the market are also crucial to ensure the growth and expansion of the ICM through fintech and digital channels,“ she said.
As such, she said the SC would intensify its ongoing efforts to raise awareness of alternative Islamic fundraising instruments such as peer-to-peer (P2P) and equity crowdfunding (ECF).
Looking into the strategic five-year plan of the CMP3, Sharifatul Hanizah said the SC would continue to leverage the strength and advances of the Malaysian ICM to realise the various goals of sustainable developments.
“Amongst others, the SC aims to transform Malaysia into a regional SRI hub by expanding the reach of the ICM to the broader stakeholders of the economy and build an enabling ICM ecosystem for Islamic social finance, as well as impact investing,” she added. - Bernama
