Finance | islamic finance ‘can break down barriers to achieving sdgs’

Islamic finance ‘can break down barriers to achieving SDGs’

A new report has identified opportunities presented by Islamic finance, highlighting practical examples of its usage from Malaysia, and outlining ways in can help in the achievement of Sustainable Development Goals (SDGs).

The report, ‘Unleashing the Potential of Islamic Finance: Global Perspectives on Achieving the SDGs with Islamic Finance Tools & Concepts’, was published by the International Federation of Accountants, the Malaysian Institute of Accountants (MIA) and the World Bank.

The report was released at the Innovation in Sustainable Development: Islamic Finance Paving the Way forum, hosted by MIA in Kuala Lumpur.

In a statement IFAC said: “In recent years, addressing the Sustainable Development Goals (SDGs) has become increasingly challenging. The worldwide economic downturn resulting from the COVID-19 pandemic has worsened the already significant $4.2 trillion funding gap to achieve the SDGs. “As countries worldwide strive to finance the ambitious scope and scale of the SDGs, they also face the complex task of serving financially underserved communities. Advancing Islamic finance has the potential not only to serve usually underbanked Muslim communities but has broader application considering its synergies with the SDGs.”

It said a major tenet of Islamic finance is the protection of people, planet and prosperity, and its underpinnings can contribute to fresh thinking on sustainable development paradigms, interpretations, and approaches. The SDGs create opportunities for Islamic finance growth, just as Islamic finance can drive greater sustainable development.

MIA said that Malaysia has become a pioneer of Islamic finance, attributable in part to its strong governance, supportive regulatory ecosystem, and its own role in professional accountancy organization and education.

“Professional accountancy organizations are playing a key role in advancing sustainable financing, and given the profession’s commitment to support the SDGs, principles of Islamic finance should be considered a viable approach,” said Asmâa Resmouki, IFAC President. “We encourage all IFAC members to look towards best practices such as those cultivated in Malaysia, and seize opportunities presented in their own jurisdictions.”

The full report can be download at https://tinyurl.com/3ym6xfd7

 

Malaysia maintains positive credit rating

A leading credit ratings agency has maintained Malaysia’s sovereign credit ratings at BBB+, meaning the country has a ‘stable outlook, underpinned by a diversified economy and export base’.

In its latest report, Fitch Ratings said Malaysia had “strong medium-term growth prospects, as well as current account surpluses”.

Its Asia-Pacific sovereigns associate director, Kathleen Chen,said: “We expect gross domestic product (GDP) to rebound in 2024. Resilient domestic demand has been driving the recovery from the Covid-19 pandemic.

“Continued investments in the manufacturing sector and the recovery in external demand are expected to bolster manufacturing output and exports in 2024,” she said.

Chen said Malaysia had a good record of foreign investments in the manufacturing sector in recent years, and she expects more investment to be incoming in the short term.

“The country’s diversified export base and also competitive manufacturing ecosystem can help it benefit from the global supply chain diversification.”

Chen said that an improvement in public finances, such as the lowering in the general government debt to GDP ratio, is among the factors that could lead to an upgrade in Malaysia’s sovereign credit rating.

“An improvement in government standards relative to the ‘A’ category also could drive up the rating action,” she said.

Chen noted although political stability has improved recently, political considerations may still have a role to play in long-term structural reforms.

Meanwhile, Fitch Asia-Pacific sovereigns head Thomas Rookmaaker said most countries in the Asia-Pacific region received stable rating outlooks, except for China, which received negative rating actions.

“There is the continued property sector weakness in China, a possibility of delayed global monetary easing, and heightened geopolitical risk in Asia, particularly linked to US-China tensions, Taiwan and the South China Sea,” he said.