194
Table 6.4: Key Issues and Challenges of Sukuk Markets – Demand Side
Issues Affected countries Recommendations
Lack of participation by
retail investors
 Malaysia
 UAE
 Turkey
 Hong Kong
 Nigeria
 To increase public awareness on
investment in retail sukuk.
Insignificant or low level
of intermediation in
capital markets
 Indonesia
 Turkey
 Nigeria
 More efforts on improving the
macroeconomic conditions of the
country (e.g. volatile local currency, high
inflation rate).
Lack of long-term sukuk  UAE
 Turkey
 Nigeria
 Hong Kong
 Government and GREs/SOEs to raise
sukuk with different maturities and
more frequently, to provide the
necessary benchmark yield curves that
will enable local corporations to raise
long-term financing.
 To finance infrastructure projects via
sukuk instead of conventional bonds,
bilateral agreements on syndicated
financing.
Non-competitive issuance
cost
 UAE
 Indonesia
 Turkey
 Nigeria
 Removal of withholding taxes, taxes on
asset transfers, stamp duty on the
conveyance of assets, duties/fees on
transfers of title deeds and corporate
tax.
Narrow investor base –
lack of cornerstone
institutional investors
 UAE
 Indonesia
 Turkey
 Nigeria
 Hong Kong
 To create more demand from NBFIs,
which need long-term investment
vehicles.
Sources: RAM, ISRA
In conclusion, the mobilisation of financial resources towards building a country’s economy
forms the bedrock of self-sustainable development. Specific government strategies―including
disciplined macroeconomic policies and fiscal policies, clear objectives for the mobilisation of
tax and non-tax revenues, and responsible public spending―are vital to attaining organic
growth. The primary responsibility lies with the government vis-a-vis promoting a conducive
environment that makes it possible to secure the requisite financial resources for investment.
Domestic policy makers determine the state of governance, macroeconomic and
microeconomic policies, the condition of the financial system, and other basic elements of a
country’s economic environment. Through proactive measures to encourage participation by
the private sector in building the financial ecosystem, a country will be able to realise its long-
term vision of becoming a contender for the status of a “power house”.