The Role of Sukuk in Islamic Capital Markets
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Figure 3.2: IDB Trust Services Limited –Wakalah Bil Istithmar Sukuk Structure
Source: IDB Trust Services Limited Base Prospectus (17 October 2016)
Note: Portfolio means a separate and independent portfolio of assets created by IDB, which includes:
1. At least 33% of the tangible assets must consist of leased assets, disbursing istisna’ assets, shares and/or
sukuk.
2. No more than 67% of the intangible assets must comprise istisna’ receivables and/or murabahah receivables.
A case in point is the Islamic Development Bank’s (IDB) first wakalah bil istithmar sukuk,
issued in 2003. In the structure, ijarah assets constituted 65.8% of the entire portfolio while
murabahah and istisna’ receivables made up the other 34.2% (Haneef, 2009). In IDB’s
subsequent sukuk issuance, as illustrated in Figure 3.2, the proportion of tangible assets was
reduced to 33% (i.e. the level set in the AAOIFI’s Shariah Standard). Because of this
precedence, market practitioners in other countries have adopted similar benchmarks in the
structuring of their wakalah structures.
3.3.2 ASIAN COUNTRIES
Within the Asian region, Malaysia and Indonesia boast the largest shares in terms of sukuk
issuance. The key difference is Malaysia’s strong foothold underpinned by a sustainable supply
of corporate sukuk issuers; Indonesia’s sovereign sukuk issuance is the key driver of its
historical volume and number of sukuk issues. In September 2014, the Government of the
Hong Kong Special Administrative Region of the People’s Republic of China became the first
non-OIC country in Asia to issue a USD16.0 billion sukuk, following changes in tax legislation in
July 2013. Japan and Singapore had followed suit in enacting similar reforms, in an attempt to
eliminate asymmetries in the tax treatment of sukuk and traditional bonds. This is to level the
playing field, so that sukuk can compete with conventional debt securities. Of the non-OIC