The Role of Sukuk in Islamic Capital Markets
3
Country Stage of sukuk market
development
Rationale
Indonesia
Developing
(Intermediate)
The Indonesian government’s keenness to grow its ICM
has been a boon to Indonesia’s sukuk market. As at end-
2016, the country recorded 16.3% (USD11.9 billion)
market share, supported by issuances from the public
sector (97.2%) and private sector (2.8%). By
comparison, the sukuk ecosystem favours the public
sector with no real value proposition created for
corporate issuers. Nevertheless, Indonesia is placed
under ‘developing’ due to its growing influence and
potential in capturing a slice of the global sukuk market.
Turkey
Developing
(Beginner)
The growth of Turkey’s sukuk market is driven by the
development of its participation banks and sovereign
issuances. From the release of regulator’s Communique
for sukuk, the number of issuance has rapidly grown to
garner more than 4.0% (USD3.0 billion) market share of
total global sukuk as at end-2016. The country’s status
under ‘developing’ evidenced key stakeholders’
supportive role to move the sukuk industry to its next
phase of growth.
Hong Kong Developing Hong Kong is reputed as an established international
financial centre. Its endeavour to include Islamic finance
into its financial system is to support a complementary
role to the Islamic finance community which it currently
serves. As a non-OIC nation that has returned to tap the
sukuk market three times, it underscores the
government’s interest to expand its sources of financing
and investor base. Its categorisation under ‘developing’
relate to this initiative by the government compared to
other global financial centres such as London, New York
and Singapore.
Nigeria Infancy Nigeria has proactively included Islamic finance into its
master plan to facilitate its ICM progression. However,
its underdeveloped financial system, currency
fluctuation, etc. pose certain challenges to grow its
domestic bond market. Hence, its placement under
‘infancy’ to depict the requirement to strengthen its
market infrastructure and attainment of
macroeconomic stability to facilitate the growth of its
domestic bond market.
Sources: RAM, ISRA