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Abstract
The prolonged global financial crisis and its consequences increasingly shifted more attention to Islamic finance and its asset backed system versus interest based system, with much focus on its flagship instrument (i.e., Sukuk). While that is positive for the industry, unfortunately it’s not for the Sukuk as an instrument since the popularity of Sukuk during its short time of existence pushed it away from its substance to emulate conventional bonds while as an instrument it is an investment tool not a debt one. Drifting away from its substance as an investment instrument toward non-shari’ah compliant debt instrument becomes a major concern to investors and practitioners alike. At the same time, its behavior as an instrument was affecting its function and role in the capital market and economy respectively, as well as the way it’s being perceived by investors which brought with it major issues and concerns about Sukuk integrity, credibility and authenticity as a truly shari’ah compliant instrument. Accordingly and despite the increasing demand on Sukuk and its attractiveness as a capital market instrument, the industry as a whole including the shari’ah scholars and the standard setting bodies have to take a second look at the present situation of Sukuk issuances and the way it’s being structured and traded. Similarly, a systematic and methodical reassessment has to take place to the way business is being conducted while maintain the core objective of Sukuk as an equity instrument which provide an essential tool for real economy that will eventually enhance the distribution of wealth with equality and fairness without compromising the authenticity and integrity of Sukuk and the Islamic finance alike. It will also embrace best international practices in term of transparency and governance among others. With the aforementioned, the article will cover some of the major concerns and issues while proposing strategies for advancing investment Sukuk as an instrument and market.
- © 2012 Pageant Media Ltd
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