THE challenge of achieving the Sustainable Development Goals (SDGs) was already daunting enough. According to the United Nations, emerging economies alone need at least US$3.9 trillion per year to attain all 17 goals by 2030. And this is a pre-Covid-19 era estimate.
Meaning, the Malaysian government's social economic response, while bold and comprehensive, might not be enough to cushion the worst consequences of the economic crisis induced by Covid-19. The World Bank's June edition of the Malaysia Economic Monitor forecasts the country's gross domestic product (GDP) will decline by 3.1 per cent this year.
So it is not surprising that the government postponed the tabling of the 12th Malaysia Plan, which was due in August. Certainly, Malaysia has a lot of catching up to do in achieving sustainable and greener development. Even before the pandemic, Malaysia had presented its National Voluntary Review, the national reporting mechanism on the SDGs, only once, in 2017.
If Malaysia has been living in a status of compliancy for years, the fallout from the pandemic can provide it with the much-needed impetus. The 12th Malaysia Plan should be geared towards creating an enabling environment to attract SDG-focused investments. Ensuring the pursuit of a New Inclusive Green Deal is going to be the hallmark of new economic planning.
Financing is going to be an issue, though. A recent report by the World Bank titled "Transformative Climate Finance: A New Approach for Climate Finance to Achieve Low-carbon Resilient Development in Developing Countries", explicitly calls for leveraging new sources of funding in order to empower a green revolution.
How to create new green infrastructure, massively promote renewable energy while addressing the now even more marked inequalities? Islamic financing and Islamic philanthropy can surely help. Malaysia knows the sector well because it has been trying for years to turn Kuala Lumpur into the world capital of Islamic finance.
At the recent annual conference of the Asian Venture Philanthropy Association, Islamic financing and philanthropy received due recognition. Khaled Khalifa, a senior officer with the United Nations High Commissioner for Refugees, said Islamic financing and philanthropy, with its Refugee Zakat Fund, has a huge potential to alleviate poverty.
Its value is between US$300 billion and a trillion a year. Every dollar paid in cash from Islamic financing in Lebanon by the UN agency resulted in a 2.1-dollar increase in local GDP in the targeted areas without affecting inflation.
The Islamic Development Bank recently raised US$1.5 billion to launch its first Sustainability Sukuk, similar to a bond, to help developing nations tackle the effects of the pandemic. Malaysia must extend its "ease of doing business" approach to Islamic financing because the needs are going to be huge.
It is extremely positive that the government recently launched the Sukuk Prihatin scheme that will support rural schools' connectivity and women-led micro enterprises.
The new 12th Malaysia Plan should not just be an edited version of what was supposed to be presented in August. Centred on the SDGs, it should instead be an ambitious document that envisions how the country will create the most conducive environment to attract "impact" investments, bankrolling a new, truly inclusive and sustainable economy.
As highlighted by Saleh Mubarak Bazead of Nama Foundation at the AVPN event, Islamic financing and philanthropy complements other forms of capital, including other types of faith-based investments. Islamic financing is, at its core, one of the best forms of impact investment.
Bringing in more Islamic capital will automatically attract ethical capital from everywhere else. While politically speaking, it is an uncertain time in Malaysia, re-envisioning a national economy centred on the SDGs should become a bipartisan effort.
The stakes couldn't be higher. Fitch Solutions Country Risk and Industry Research recently blamed the political instability for the national economy's worrying prospects in the years ahead. Progressive public policies and the much-needed capital to put them into practice will require the stewardship of the political class.
Cooperation and dialogue will be required to prove the damning Fitch Solutions report wrong, ensuring Malaysia can become a global leader in sustainable and inclusive development.