Saturday, May 25

RAM Ratings: Malaysia well poised as green finance hub

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KUCHING: RAM Ratings sees Malaysia gaining traction as a green finance hub, driven by its well-established sustainable financing system.

According to the Green Finance Opportunites in Asean report published by DBS Bank and the United Nations Environment Programme Inquiry in November 2017, demand for additional Asean green investments is envisaged to come up to an estimated US$3 trillion between 2016 and 2030, with 60 per cent earmarked for infrastructure.

This opportunity represents a new Asean green investment market that is 37 times the size of the global green bond market in 2016.

Malaysia’s well-established bond and sukuk markets are thus well poised to benefit from this anticipated green growth, given that infrastructure represents a signifant portion of the Malaysian market, RAM Ratings said in a press statement.

“Green finance and Islamic finance are rapidly and successfully converging in Malaysia,” observed RAM Ratings’ deputy chief executive officer Promod Dass, during a panel session at the third Annual Symposium on Islamic Finance at Bank Negara Malaysia held recently.

Promod elaborated that Malaysia’s success in sustainable finance had been catalysed by the regulators.

The release of the Sustainable and Responsible Investment (SRI) Sukuk Framework by the Securities Commission of Malaysia (SC) in 2014 and the Asean Green Bond Standards by the SC-led Asean Capital Markets Forum in November 2017 have been important drivers.

The above has translated into market development, including RAM-rated pioneer sukuk, which are Khazanah Nasional Bhd’s Sukuk Ihsan – the world’s first SRI sukuk in 2015, and Tadau Energy Sdn Bhd’s recent issuance of the world’s first green SRI sukuk. Permodalan Nasional Bhd’s proposed Merdeka Asean Green SRI Sukuk will herald another market first.

“Credit rating agencies are a key part of the eco-system that links the financial and real economies in driving change, to achieve a nation’s commitments under the United Nations’ (UN) Sustainable Development Goals,” Promod added. On 26 May 2016, RAM joined the line-up of 6 pioneer credit rating agency signatories to the UN-supported Principles for Responsible Investment’s Statement on ESG in Credit Ratings.

RAM’s sister company, RAM Consultancy Services Sdn Bhd, is also a proponent of green finance and the development of corporate sustainability.

RAM Consultancy is the pioneer Asean-based provider of sustainability ratings and second opinions on green bonds and sukuk. In October 2017, it issued a sustainability rating for Sunway Bhd, followed by a second opinion on Sinar Kamiri Sdn Bhd’s proposed RM245 million Green SRI Sukuk in December 2017, for a 49-MW solar power plant.

Second opinions are independent assessments of an issuer’s green bond or sukuk, benchmarked against recognised standards and guidelines on green bonds.