Islamic Finance

CIMB Islamic launches initiatives that help businesses navigate an economy impacted by the pandemic

BY Salaam Admin

16 Nov 2020

Insight

Salaam Gateway

This article is produced and sponsored by CIMB islamic. It was first published in the State of the Global Islamic Economy 2020/21 report produced by DinarStandard and supported by the Dubai Islamic Economy Development Centre. The report can be downloaded from here.

The year 2020 will be remembered as a time of great change, with the global economy facing an unprecedented upheaval at a scale never before seen in human history. The pandemic has brought with it many challenges but also opportunities for all global markets and economic sectors. Despite increased controls resulting from unavoidable containment measures, business and trade have continued, illustrating the resiliency of global supply chains.

The Islamic economy, built on global trade routes that go back centuries and reflecting the aspirations of over 1.9 billion Muslims, has been equally resilient. In ASEAN, the region with the world’s largest Muslim population, countries such as Malaysia have remained committed to the development of the Islamic ecosystem.

The pandemic has not stopped business and trade, even at the national level, where the Malaysian government has signed a Memorandum of Understanding with the governments of Japan and Korea for the enhancement of trade. This is representative of a global Islamic economy, which is expected to expand 13% by 2024, with a focus on halal food and Islamic finance. With global Islamic markets now valued at $2.88 trillion, supply is only able to meet the demand of the world’s Muslim population by 10-20%.

In this context, CIMB Islamic is committed to supporting business resiliency and innovation in the face of significant change. The pandemic has created a greater appreciation for the planet we live in, and CIMB Islamic continues to keep sustainability as a key mantra in seeking business-driven solutions that enable both people and the planet to thrive. Regarding this, the bank has been focused on connecting businesses sustainably with the global Islamic economy via its products, services, and platforms.

Several key propositions have been introduced to enable businesses to realize the opportunities represented by halal trade and the greater awareness of sustainability. Alongside this, CIMB Islamic has offered businesses payment moratoriums and access to the various government stimulus packages for relief and support during the testing times of 2020. Aimed in particular at the most needful segments of the economy, CIMB Islamic is focused on uplifting SMEs, the “backbone” of the economy in terms of business potential, sustainable growth, employment, and technological innovation.

Exemplifying this approach, Micro Biz Ready is a CIMB proposition that was developed in support of the micro SME sector in line with government measures to aid the growth of SMEs. Supporting this National Agenda, CIMB announced an allocation of MYR50 million ($12 million) to benefit the micro SME segment, providing the base platform for its other solutions to enhance business.

CIMB Islamic’s Halal Biz Ready, launched in early 2020, enables businesses to connect to global halal trade. Malaysia’s SME base is challenged in terms of absolute numbers of companies with halal certification across all sectors, and access to financing remains a challenge. The proposition is intended to bridge the gap and finance the creation of more halal-certified SMEs. Alongside multiple benefits, CIMB Islamic offers up to MYR100 million ($24 million) in total financing for SMEs to achieve halal status as well as access to different enablers across the value chain in support of a vibrant halal business ecosystem.

This theme of collaboration in enhancing business and trade continues in the Sustainable Exporters Programme, announced together with MATRADE in February 2020. Its aim was to equip SMEs with the necessary knowledge and tools to access new markets globally, where there are high standards of sustainable sourcing. In combination with the Halal Biz Ready solution, this brings the natural confluence of halal and sustainability standards together toward the goal of achieving a “sustainable halal” ecosystem of companies and trading partners.

This focus on sustainability extends beyond trade standards and into the “real” economy. CIMB in late 2019 launched Renewable Energy Financing for SMEs in Malaysia, with one of its first initiatives being the provision of 100% financing to cover the cost of solar photovoltaic system installation. To further this, CIMB Islamic is introducing Green Biz Ready, a program to support sustainable business in Malaysia and its interlinks with the global Islamic economy. The innovative program aims to provide knowledge, technical assistance, and financing for SMEs that want support in tapping green initiatives.

CIMB continues to develop its Halal Corridor strategy of enabling this ecosystem of halal buyers and sellers via its network of global banks accessible through the Trade Club Alliance (TCA). There are currently three potential corridors for halal in the development stage between Malaysia and the UK, Japan and Korea, with active business matching supported by the leading banks in those economies. There is exciting potential for further cross-pollination, with Malaysia positioning itself as a global hub with strong incentives for halal operators to locate their facilities in the country.

The acceleration of digital transformation has been a vital consequence of the pandemic, and CIMB Islamic is ready to enable businesses to adapt to this pace of change. CIMB Islamic recognizes that a realignment in business models and operations is essential in ensuring long-term sustainable growth.

With this immediate focus on enabling SMEs to move forward, the bank has developed specific modules to assist businesses in navigating an economy impacted by the pandemic and consider new ways and approaches in how to conduct business. With this, CIMB Islamic is progressing an “E-Halal Biz Ready” strategy focusing on e-commerce to enable SMEs with the tools to develop e-shops and ensure successful digital transactions and subsequent delivery.

CIMB Islamic has, in recent years, initiated a strategy known as the “Halal Corridor” to enable Malaysian businesses to take advantage of the opportunities that the global halal economy offers and remains committed to the development of this important sector. While the pandemic has brought huge challenges, it has also brought to the forefront awareness of critical factors such as quality assurance, hygiene standards, digital technologies, sustainability principles, and responsible banking. CIMB Islamic looks forward to the future with optimism and readiness to serve customers in the new normal and enable them to flourish in the coming age.

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Islamic banking