Short position – Syariah boost for SMEs, promising prospect

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Boost to Syariah for SMEs

An easy-to-use syariah compliance toolkit for unlisted micro, small and medium enterprises (MSMEs) and crowdfunding platforms is a welcome and timely initiative.

Becoming syariah compliant takes effort from companies that have not yet done so.

Big companies are better placed to hire consultants or even use their well-paid bankers to advise them on this.

For small businesses, the Toolkit – possibly the world’s first such feature – is a quick and easy solution.

There is a growing interest in the world in Islamic finance and in this regard, financing based on syariah remains extremely untapped.

Malaysia is already a world leader in sukuk issuance.

Moody’s Investors Service, in a recent report, notes that Malaysia’s total sukuk issuance in 2020 contributed 32% of global sukuk issuance, amounting to $ 65.6 billion (RM 276.57 billion ). Saudi Arabia is next at 28%.

This toolkit, introduced by the Securities Commission (SC) (pic) will mainly benefit crowdfunding (ECF) and peer-to-peer (P2P) platform operators, as well as syariah advisers.

This is a major initiative by the regulator to provide advice on reviewing the syariah status of unlisted MSMEs, which are the backbone of the Malaysian economy.

Interestingly, despite the uncertainties due to Covid-19 last year, the total amount raised by investors was more than 5.5 times for the ECF and 1.2 times for the P2P platforms compared to the previous year, noted SC chairman Datuk Syed Zaid Albar.

Malaysia is also the world’s main halal hub, with the value of annual exports representing a substantial share of the country’s total exports.

As Malaysia’s halal economy is expected to reach US $ 113.2 billion (RM 477 billion) by 2030, there are huge opportunities for MSMEs to be tapped.

The determinant of good or bad

The value of a country’s currency says a lot more than what it is able to buy, how much confidence there is in the local unit, or even how competitive its value is against its competitors. .

The value of a country’s currency is the denominator of how good or bad things have been for a country over a period of time.

For the ringgit, the fall of the local currency against many of its regional competitors over the past 10 years is symptomatic of the economic and structural problems the country has faced over the years.

All currencies appreciate fundamentally if economic conditions are generally favorable in a country.

Dollar ringgit currency

In the case of Malaysia, the widespread and steady fall in the ringgit over the past decade relative to its regional counterparts indicates that all is not going well economically for the country.

And how these other countries are catching up with Malaysia.

Yes, there was a period when the price of crude oil soared north of US $ 100 (RM 422) a barrel and the ringgit saw its value rise significantly relative to its regional peers.

But since the fall in the price of crude oil and the lingering economic problems in the country, the ringgit has declined in value.

The question of using a currency’s “competitiveness” to keep exports competitive is now a long-standing argument that has less and less credibility year after year.

The problem is, without a stronger currency, there is little urgency for businesses and industries to innovate. And as other countries see their currencies progress, the relative “competitiveness” of the ringgit will set up other socio-economic indicators.

The goal of keeping a relatively competitive currency is of little interest if everything is designed to keep things as they are.

Every country needs progress, from an economic to societal point of view, so that the overall benefit is reflected at all levels.

A dazzling perspective

PROFIT This season has been one fantastic financial result after another, thanks to the low base effect last year. Amid the various eruption figures, Malaysia Smelting Corp Bhd also reported a multi-fold increase in profits compared to a year ago.

In its outlook, the tin smelter says tin prices continue to rise, supported by continued demand for tin solder in consumer electronics and supply disruptions due to blockages in tin-producing countries around the world (including Malaysia), voluntary production cuts in Brazil and Indonesia, and political unrest in Myanmar.

The outlook for tin demand is promising given its continued use in semiconductors, electronics, household appliances, photovoltaics, automobiles and lithium-ion batteries.

MSC Tin FoundryMSC Tin Foundry

Tin has certainly found favor as the electronics industry moves away from lead-free solders and tin has been the biggest beneficiary.

As the use of electronics has skyrocketed in many areas, so has the use of tin in industry.

There is now literature that the use of tin can improve the performance of lithium-ion batteries, but some suggest that the increase of 60,000 tons will occur in 10 years.

What the tin industry has for itself is that supply is not that easy to find and some of the bigger players in tin may have difficulty mining large quantities. tin needed.

The good news is that there is an industry that will need a lot of tin in the future, but its certainty remains to be seen.

The problem with battery technology is that it is still evolving and it is not clear what the technology will look like a decade from now and what the mineral requirements will then be to produce more efficient batteries.


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