Do equity-based Sukuk structures in Islamic capital markets manifest the objectives of Shariah??

Dusuki, Asyraf Wajdi

doi:10.1057/fsm.2010.17

Cited by 32 publications

(35 citation statements)

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“…The Malaysian Securities Commission defines mudarabah as a contract between two parties (a rabb al-mal or an investor who provides the capital and a mudharib or an entrepreneur who manages the project) to finance a business venture. If the venture is profitable, the profit will be shared based on a pre-agreed ratio and if there is any loss, the loss will be the responsibility of the investor (Dusuki, 2010). Figure 3 illustrates the structure of mudarabah Sukuk.…”

Section: Research Frameworkmentioning

confidence: 99%

“…Figure 3 illustrates the structure of mudarabah Sukuk. In line with Daneshfar et al (2010) and Dusuki (2010), a profit sharing arrangement is proposed for the agricultural development in the research area as can be seen in Figure 4. The investor and the farmers/land-owners signed an agreement to utilize investor's fund for the agricultural development.…”

Section: Research Frameworkmentioning

confidence: 99%

“…One of the most popular instruments is equity based Sukuk in which participatory contracts involve mudarabah and musharakah. With this arrangement, if the business is profitable, the profit will be shared based on a pre-agreed ratio and if the business experience any loss, the loss will be the responsibility of the investor (Dusuki, 2010).…”

Section: Introductionmentioning

confidence: 99%

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The Role of Sukuk Financing for Sustainable Development of Smallholder Farmers

Soeleman¹,

Lestari²

2015

AABFJ

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The greatest advance made by mankind was probably the agricultural revolution that has been developed into agricultural development along with population growth in the forms of agricultural expansion and agricultural intensification. The global land grab driven by the acquisition of land has caused radical changes in the use and ownership of land and has important implications for equitable and sustainable development in which local people have been moved to marginal locations. To ensure that the agricultural activities are sustained, a balance of three concepts of people, planet, and profit (3P) are critical to achieve long term social, environmental, and economic issues. One of recently popular instruments to fairly treat the people is an equity based Sukuk in which profit will be shared based on pre-agreed ratio between the investors and the people involved. In term of conservation of planet, strategy in selecting the agricultural commodities and the timing of harvesting are critical. An investment decision-making process by using agricultural appraisal process is established to ensure that the agricultural activities are financially profitable. Abstract:The greatest advance made by mankind was probably the agricultural revolution that has been developed into agricultural development along with population growth in the forms of agricultural expansion and agricultural intensification. The global land grab driven by the acquisition of land has caused radical changes in the use and ownership of land and has important implications for equitable and sustainable development in which local people have been moved to marginal locations. To ensure that the agricultural activities are sustained, a balance of three concepts of people, planet, and profit (3P) are critical to achieve long term social, environmental, and economic issues. One of recently popular instruments to fairly treat the people is an equity based Sukuk in which profit will be shared based on pre-agreed ratio between the investors and the people involved. In term of conservation of planet, strategy in selecting the agricultural commodities and the timing of harvesting are critical. An investment decision-making process by using agricultural appraisal process is established to ensure that the agricultural activities are financially profitable.

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Section: Research Frameworkmentioning

confidence: 99%

Section: Research Frameworkmentioning

confidence: 99%

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The Role of Sukuk Financing for Sustainable Development of Smallholder Farmers

Soeleman¹,

Lestari²

2015

AABFJ

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“…Unlike conventional bond holders, sukuk holders do not receive interest since riba (interest) is prohibited in Islam, but they have a proportion of ownership in the underlying asset and the right to receive cash flows from the underlying (Nanaeva, 2010). Sukuk can be structured by the nature of the project for the purpose of project financing, and it depends on the underlying shariah principles such as ijarah, mudharabah, musharakah, and others (Abdullah, Yazid, Abdullah, & Kamarudin, 2014;Dusuki, 2010;Tariq, 2004;Zawawi, et al, 2014). Sukuk structures also can be classified under two common classifications: asset-based sukuk or asset-backed sukuk (Biancone & Shakhatreh, 2015).…”

Section: Islamic Bonds (Sukuk)mentioning

confidence: 99%

“…It can be structured depending on the underlying shariah principles and the intention of finance (Abdullah et al, 2014;Dusuki, 2010;Tariq, 2004).…”

Section: Sukukmentioning

confidence: 99%

Identifying risk in shariah compliant financing for transport infrastructure projects in Indonesia

Rianto¹

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The Government of Indonesia is seeking an alternative mode of finance to develop its transport infrastructure. Taking into account the large Muslim population in Indonesia, the strong domestic demand for Islamic finance products, and the growing potential of Islamic banking operations, the government has been promoting the use of shariah compliant financing. Shariah compliant financing is in its infant stages, with a variety of financing instruments from debt-based financing (murabahah, istisna, and ijarah), equity-based financing (musharakah and mudharabah), and service-based financing. Financing can also be obtained from issuing and selling sukuk, certificates that represents ownership of a tangible asset or its usufruct, to investors. Shariah compliant financing and conventional financing are distinguished on the principle of financing, asset ownership, and the involvement of shariah board as a technical and administrative body supervising relevant activities comply with shariah.The literature to date has predominantly focused on risks in the Islamic banking industry and its operation. This research aims to identify the sources and types of risk exposure in shariah compliant financing for transport infrastructure projects in Indonesia. This research conducted thirteen semi-structured interviews with key transport stakeholders from the government, Islamic bank, academic, and consultant sectors. The research reveals that in Indonesia, debt-based shariah compliant financing instruments are the most utilised to finance transport infrastructure projects. The research identified that railways, roads, bridges, and seaports are the type of transport infrastructure facilities that are financed using shariah compliant financing instruments. The risks in shariah compliant financing are generally similar to the risks found in conventional projects with the addition of shariah compliance risk. These risks are identified into four categories: market, institutional and regulatory environment, shariah compliance, and project and structuring.The government is recommended to provide higher return of investment and shorter maturity terms in sukuk to attract more investors and stimulate the secondary market to reduce liquidity risk for the investors. This research also proposes that the National Shariah Board should be involved not only in the structuring stage but also in the entire lifespan of financing to ensure the transaction complies with shariah and reduce the exposure to shariah compliance risk.

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Construction of Maqāṣid al-Sharīʿah-Based Index of Socio-Economic Development: Principles and Issues

Seman

Dzolkarnaini

2019

Palgrave Studies in Islamic Banking, Finance, and Economics

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Do equity-based Sukuk structures in Islamic capital markets manifest the objectives of Shariah??

Cited by 32 publications

References 1 publication

The Role of Sukuk Financing for Sustainable Development of Smallholder Farmers

The Role of Sukuk Financing for Sustainable Development of Smallholder Farmers

Identifying risk in shariah compliant financing for transport infrastructure projects in Indonesia

Construction of Maqāṣid al-Sharīʿah-Based Index of Socio-Economic Development: Principles and Issues

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