Bursa Malaysia: Leading Islamic Finance and Green Investments

Background of Bursa Malaysia's success

Bursa Malaysia has been largely observed as the global leader in the fields of adopting Islamic Finance and they possess a string agenda towards green and environment-friendly types of investments. But all this was not acquired overnight. It took many key partners that range from the capital market regulator of the country, various government bodies towards the private sectors. Bursa Malaysia’s ecosystem majorly thrives as the total Islamic law was compliant of assets which have been currently estimated to the US $2 trillion and it has been backing up the green growth agenda of Bursa Malaysia (Musse,  Nor and Ahmed 2021). The sustainability of Islamic finance exerted huge potential as it caters to the appetites of having a wide range of shareholders. It generally meets the goals of Islamic finance and majorly focuses on the social and environmental considerations concerning over investment. Beyond the key partners of Bursa Malaysia has this Islamic  financial system that has led them to come this far. In the case of other developing countries, they seek to activate this process and develop certain questionable investments that help them to migrate the various effects due to the climatic change as it is very important to note that the building of the blocks which have also contributed towards the expansion (Hiroshi 2021). By using this Islamic finance most of the Malaysian companies are expanding their operations over foreign markets and have also changed their mode of financing which seems to be much more convenient and easily adaptable.

By introducing this Islamic finance n Bursa Malaysia due to this product innovation, it thrived within the environment of the experts who have been open to various new thoughts and it has been supported by the regulators who encouraged this development actively and leads to the development of many new forms of products. This boosted the expansion of these local Islamic financial sectors which expected to give rise to 147,000 to 210,000 within a decade.

By introducing this Islamic fiancé within Bursa Malaysia it acts as the key step in terms of creating a very strong ecosystem that laid down its foundation. Malaysia's Islamic finance is a sustainable ecosystem as it provides benefits from the comprehensive collections of guidelines which includes the SRI Suluk Framework and the SRI funds that have been issued by SC of Malaysia (Ahmad, Dasar and Ghani 2021). This leads to the declaration of providing a regulatory framework that facilitates a more social, green, and sustainable financial system.  There are other financial regulators like the Bursa Malaysia who have also started financial reporting for large companies and the BNM has also issued certain guidance as documents that majorly facilitate the VBI towards using re-oriented Islamic financial business models towards fulfilling the Islamic finance objectives. After Malaysia adopts the policy of dual banking system where the Islamic financial industries majorly operate on parallel basis having their conventional counterparts within the fundamentally that is similar to that of the financial infrastructure. The IFSA repealed and thereafter consolidated the Islamic Banking Act of 1983 and the Takaful Act of 1984. Adopting this new financial era within the country proves to be beneficial as the Islamic banking assets reached their maximum level of USD 255 billion as of 2019 December having total funds that have been placed with the Islamic banks that at present represent 39% of the total banking sector deposits (Shujau 2021).

Reference

Ahmad, A.A., Dasar, M.H.M. and Ghani, N.A.R.N.A., 2021. Analysis of Tawarruq contract in the Islamic profit rate swap (IPRS) implementation in Malaysia. Qualitative Research in Financial Markets.

Hiroshi, O.M., 2021. The Development of Bursa Suq Al-Sila'in Malaysia as a Commodity Trading Platform for Islamic Finance. Development, (20), pp.1-19.

Musse, o.s.h., nor, f.m. and ahmed, a.m., 2021. the effect of islamic leverage on shariah-compliant firms’performance: empirical evidence from bursa malaysia. International Journal of Business and Economy, 3(1), pp.85-97.

Shujau, M., 2021. Comparative study of the legal and regulatory framework of Islamic capital market in Maldvies and Malaysia: a reform oriented analysis.