Publication:
Innovation is key to commence a sukuk market: case of Maldives
Abstract
Maldives is a hundred percent Muslim country consisting more than thousand islands situated in the Indian Ocean. Nevertheless, the concept of Islamic finance is still new to the country as the first form of Islamic finance was introduced to the country in 2003 via the operations of Amana Takaful Maldives and it took about eight years from 2003 to establish the first Islamic Bank of the country. In 2011, the regulator of the capital markets in the country, the Capital Market Development Authority ('CMDA') undertook the project of pioneering a sukuk market in the country and this dream was realised only in 2013, when Housing Development Finance Corporation Plc ('HDFC') issued the first sukuk that was listed in the Maldives Stock Exchange ('MSE'). The purpose of this article is to explain the challenges faced in issuing the first sukuk in Maldives, in a detailed manner and to inspire other jurisdictions aspiring to issue sukuk by proving this practical example that innovation is the key to commence a sukuk market. This article will also attempt to explain and highlight the inside views of the author who structured the first sukuk for Maldives and who facilitated the process from the beginning to the end. It infers that to initiate a sukuk market in any jurisdiction that has no specific legal and regulatory framework for it, the key to start the market would be to use innovation and move forward with the available resources at hand without reluctance. If this very first step done correctly, the demand for sukuk is capable of building a required legal and regulatory framework in place. Sukuk is a flexible product that could be molded according to the needs and requirements of any jurisdiction. As such sukuk when implemented in different jurisdictions will create new types of it that will reflect the ultimate beauty of Islamic finance. The article highlights a shift in paradigm that could potentially be utilised in the introduction of sukuk in new markets. It is limited to Maldivian experience of sukuk. The details and background of the first sukuk in Maldives is not discussed in detail yet in any publication and it is anticipated this article will inspire future research towards the subject. finance was introduced to the country in 2003 via the operations of Amana Takaful Maldives and it took about eight years from 2003 to establish the first Islamic Bank of the country. In 2011, the regulator of the capital markets in the country, the Capital Market Development Authority ('CMDA') undertook the project of pioneering a sukuk market in the country and this dream was realised only in 2013, when Housing Development Finance Corporation Plc ('HDFC') issued the first sukuk that was listed in the Maldives Stock Exchange ('MSE'). The purpose of this article is to explain the challenges faced in issuing the first sukuk in Maldives, in a detailed manner and to inspire other jurisdictions aspiring to issue sukuk by proving this practical example that innovation is the key to commence a sukuk market. This article will also attempt to explain and highlight the inside views of the author who structured the first sukuk for Maldives and who facilitated the process from the beginning to the end. It infers that to initiate a sukuk market in any jurisdiction that has no specific legal and regulatory framework for it, the key to start the market would be to use innovation and move forward with the available resources at hand without reluctance. If this very first step done correctly, the demand for sukuk is capable of building a required legal and regulatory framework in place. Sukuk is a flexible product that could be molded according to the needs and requirements of any jurisdiction. As such sukuk when implemented in different jurisdictions will create new types of it that will reflect the ultimate beauty of Islamic finance. The article highlights a shift in paradigm that could potentially be utilised in the introduction of sukuk in new markets. It is limited to Maldivian experience of sukuk. The details and background of the first sukuk in Maldives is not discussed in detail yet in any publication and it is anticipated this article will inspire future research towards the subject.
Keywords
Innovation , Sukuk , Maldives
Citation
Muneeza, Aishath. (2016). Innovation is key to commence a sukuk market: case of Maldives. Malayan Law Journal, 5, pp. lxxxv-xciii
Publisher
LexisNexis Malaysia Sdn Bhd