First and foremost, let me extend my warmest greetings to o The Honorable Dato’ Seri Anwar bin Ibrahim, Prime Minister of Malaysia
- The Honorable Datuk Seri Amir Hamzah Azizan, Minister of Finance II, Malaysia
- The Honorable Sri Mulyani Indrawati, Minister of Finance, Indonesia
- The Honorable Goksel Asan, President, Finance Office of Presidency of the Republic of Turkiye
The respected dignitaries present, the rest of our distinguished speakers and panelists, the representatives of government agencies, academia, industry professionals, the media, and all other participants in this important event.
I am sorry I could not be there for this Forum. I remember vividly that I opened the Malaysia office in 2015, at the invitation of the Government of Malaysia. It has now become a WBG Knowledge and Research hub and I am happy that this engagement is going strong.
I am pleased to join you in today’s discussion around “Navigating Economic Transformations through Value-based Reforms.”
The world faces a challenging economic, social, and geopolitical environment, the burden of which falls disproportionately on vulnerable populations.
Countries are grappling with a range of complex policy objectives to achieve the Sustainable Development Goals (SDGs) and climate targets.
The midterm review of the SDGs at the 2023 UN General Assembly in New York showed that only fifteen percent of the SDGs have been achieved. Considering the many challenges facing the people in the countries we serve, we need to focus our efforts in three key areas:
- First, leveraging partnerships to end poverty on a livable planet,
- Second, supporting innovation to tackle inclusion, climate, and environmental challenges, and
- Third, sharing best-in-class knowledge globally for more impactful policymaking.
First, the World Bank believes that leveraging partnerships offers valuable contributions to our mission to end poverty on a livable planet.
We believe that progress on the SDGs and climate targets requires us to leverage our diverse intellect and resources to devise innovative solutions to the world’s problems.
Over the last four years, the World Bank has mobilized a record US$440 billion for the SDGs and climate. But this is not enough. Even with funding complemented by other MDBs, public and private sources, the funding gap is estimated at more than US$4 trillion annually. Significantly more resources are required to fund the massive investment needs.
As of 2023, global Islamic finance assets amounted to approximately US$3.25 trillion3 according to IFSB. There is significant potential to further leverage Islamic finance with the SDGs and climate goals, building on the core Islamic finance principles. However, as of now less than one percent of these funds have been linked to green and sustainable activities.
Late last year, the Bank unveiled a new partnership with the Islamic Development Bank to drive impact and improve the lives of people. This partnership will accelerate action to address climate, gender, and youth development and foster economic transformation.
Clearly, Islamic finance can play a pivotal role in bridging a share of the global SDG funding gap. Second, Islamic finance has shown its potential to bring innovative solutions in tackling inclusion and climate challenges.
As this audience knows well, Islamic finance is based on the principles of justice, fairness, and transparency. It can effectively reach the underserved, especially those who require financial products and services aligned with their faith.
The World Bank’s involvement in Islamic finance is directly linked to our work on expanding access to and usage of financial services in client countries, notably by the most vulnerable, including women.We have collaborated with client countries to adapt conventional financial products to become Shariah-compliant, thus expanding the range of Islamic finance instruments.
One particular area of innovation has been at the intersection of Islamic finance, inclusion, and sustainability initiatives. For example, in the Horn of Africa, the World Bank’s DRIVE project introduced parametric Islamic insurance (takaful) to build pastoralists' climate resilience while promoting financial inclusion.
In Malaysia, the World Bank has been a close partner of Bank Negara Malaysia and Securities Commission Malaysia in issuing the world’s first green Sukuk in 2017. From that initial issuance, valued at US$58.4 million6, the total issuance of green and sustainability Sukuk globally reached, according to the London Stock Exchange Group, US$10.1 billion7 in the first nine months of 2023. As early as 2004, IFC issued an Islamic Malaysian ringgit (MYR) denominated bond in the domestic market and is now looking to scale up Shariah-compliant issuances.
The World Bank has also worked closely with Bank Negara Malaysia and other stakeholders since 2018 to support the development and implementation of the “Value-based Intermediation” framework for Islamic finance institutions, which has helped catalyze the growth of sustainability initiatives.
Let me now come to my last point, on sharing best-in-class knowledge globally for more impactful policymaking:
At the World Bank, one of our important roles is to use the knowledge gained over decades of development work to deliver solutions for impact and scalability.
The World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia, which I was privileged to co-inaugurate in 2015, provides excellent examples of what interventions from a knowledge bank can look like and can be leveraged in South-South collaboration.
Over the years, we have effectively collaborated with the Ministry of Finance, Bank Negara Malaysia, Securities Commission Malaysia, and the Malaysian government at large to generate new knowledge together, bring global knowledge to Malaysia and share innovations from Malaysia with other developing countries.
For example, in 2022, Bank Negara Malaysia and the World Bank issued a report assessing nature-related risks to the financial system that concluded with a plan for policy action. A range of these actions are being actively implemented, with support from the World Bank. This was the second such report from a World Bank client country and has served as an example for countries facing similar challenges.
Another example is the ongoing World Bank support, which leverages global knowledge to develop an effective monitoring and evaluation framework for Islamic social finance in Malaysia. It is important that policymakers foster the adoption of robust frameworks that support greater accountability, build trust, and increase visibility and access to funds to mitigate the risk of “impact washing” and help scale up Islamic finance solutions.
Finally, this conference is an excellent demonstration of the World Bank's support of strategic partnerships as a knowledge bank. The Knowledge Bank has the potential to reinvigorate the knowledge relationship with Malaysia. This conference could be the first in a series of engagements with Malaysia and the region. We look forward to continuing this strong relationship and supporting this agenda in the coming years.
I would like to finish by applauding the Malaysian government and the organizers for this important conference. I wish you a productive discussion and, most importantly, am looking forward to this strong and rigorous dialogue with participants on the issues as well as the ideas to shape the world and the future.
