Govt should encourage companies to tap into sustainable financing - Maybank IB

KUALA LUMPUR: The government can further encourage companies and institutions to tap into sustainable financing which is guided by the Sustainable and Responsible Investment (SRI) framework, said Maybank Investment Bank Bhd (Maybank IB) chief executive officer Fad'l Mohamed.

The SRI is a growing sector that had witnessed accelerated demand and opportunities in the past year, he said, adding that the sustainable bonds space is one area that has been seeing significantly higher returns on investment.

"We welcome measures that would encourage the corporate sector to utilise the existing SRI framework to develop issuances such as SRI sukuk that can impact positively on economic recovery and help communities to rebuild better," he said in a statement yesterday.

Notably, Bond Pricing Agency Malaysia's (BPAM) Environmental, Social and Governance (ESG) All Bond Index had delivered returns of 8.21 per cent year-to-date compared to 6.49 per cent from all domestic corporate bonds and sukuk under the RF BPAM CORPS All Bond Index, he said.

Fad'l pointed out that one of the successful measures that the government rolled out recently was the RM666 million Sukuk Prihatin, which initially targeted an issuance size of RM500 million.

The social impact sukuk was oversubscribed by 1.33 times and was upsized by an additional RM166 million.

"We believe that the success of Sukuk Prihatin has demonstrated that Malaysia’s capital market is well prepared to support fiscal initiatives.

"By further engaging both domestic and foreign investors, the government can access funding to achieve its key Budget pillars of targeted support for vulnerable groups, supporting industries through specific incentives and empowering service delivery," he said.

Ahead of the tabling of the national budget in Parliament on Nov 6, Fad'l said: "We look forward to the tabling of Budget 2021 and the measures that the government will introduce to support the economy and protect the welfare of the rakyat."

-- BERNAMA