NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, October 9, 2013

PETALING JAYA: There is a need to develop new and innovative financial solutions to facilitate the growth of green technology companies in Malaysia, Bank Negara Malaysia deputy governor Muhammad Ibrahim said yesterday.

Muhammad said one example is the Islamic Mudarabah contract that could be tailored for various financing purposes for small and medium companies such as for one-off project financing, new start-up enterprises, investment funds and sukuk structure.

“The greater use of equity based models in Islamic financial solutions have been observed, this includes participatory or equity based contracts such as mudarabah and musharakah that support entrepreneurial ventures,” Muhammad said in his keynote address at the Kuala Lumpur Convention Centre, during the The Green Financing: Discover Green Technology Industry in Malaysia.

In Malaysia, the adoption of these contracts has increased from 1.4% in 2008 to 5.2% in 2012.

Mudarabah is a form of partnership where one party provides the funds while the other party provides expertise.