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istithmar contracts, which combine tangible assets (such as ijarah assets and shares) and debt
receivables (arising from murabahah or istisna’ transactions), are rapidly gaining ground. The
benchmark issuances of wakalah bil istithmar sukuk by the IDB in 2003 and 2005 have
influenced other market players (including Turkish private sector issuers) to adopt the same
structure.
A similar scenario can also be observed in Asia, with the exception of Malaysia; Brunei,
Pakistan and Indonesia have adopted ijarah as the underlying Shariah contract for most of
their issuances. Unlike other countries in the region, Malaysia has been issuing sukuk based on
different Shariah contracts, predominantly murabahah. This is due to the varying opinions of
Shariah experts. For example, the trading of debt or bay’ al-dayn is a common practice in
Malaysia following the SAC of the SC’s acceptance of the principle of bay’ al-dayn as one of the
concepts for the development of Malaysia’s ICM instruments in August 1996. Over the years,
Malaysian practices have converged with international standards, hence the increased
issuance of wakalah/wakalah bil istithmar sukuk, which comply with the AAOIFI requirements
on secondary trading.
For most African countries that have issued sukuk, the frequently used Shariah contract is
ijarah. The reasons cited by market participants include the simplistic features in terms of
flexibility, tradability and suitability in funding construction projects. Unlike the murabahah
structure, the ijarah structure enables secondary trading of the sukuk instrument on an
exchange, which in turn helps increase investors’ participation in the transaction. Moreover,
the ijarah contract is innately designed to produce periodic rental payments, which
automatically act as coupon payments to sukuk investors. On the other hand, The Gambia has
issued short-term sukuk for liquidity management based on the salam contract.
Based on case studies and field visits to the selected countries, several key issues and
challenges confront the various sukuk markets in terms of structures, as explained in Table
6.2.
Table 6.2: Key Issues and Challenges of Sukuk Markets – Sukuk Structures
Issues Affected countries Recommendations
Limited sukuk structures
that have a balanced mix of
social considerations and
commercial values
 Malaysia
 UAE
 Indonesia
 Turkey
 Hong Kong
 Nigeria
To increase green and social sukuk that
embrace the VBI concept and SRI, which
looks at ESG screening.
Shortage of attractive sukuk
structures that cater to the
distinct requirements of
Shariah-based institutional
investors
 UAE
 Indonesia
 Nigeria
 Turkey
 Hong Kong
To expand the boundaries of innovation in
sukuk structures (e.g. waqf-linked sukuk) to
entice religious institutional investors (e.g.
waqf and hajj funds) to tap the sukuk
market.
Lack of understanding on
ICM instruments (e.g.
unfamiliarity with Islamic
structures and principles)
 Indonesia
 Turkey
 Hong Kong
 Nigeria
To increase market awareness on ICM
products through conferences, training
sessions and seminars.
Sources: RAM, ISRA