THE EGYPTIAN DEBATE ON SUKUK LAW

THE EGYPTIAN DEBATE ON SUKUK LAW

The current Egyptian debate about the sukuk draft law that had been proposed by the government and tabled in the People Assembly and passed but rejected by some shows clearly that sukuk is such a topical topic in a country where Islamic finance was tested many decades ago even before many other countries started their Islamic finance movement. During the eighties of the last century, many would remember the controversy surrounding the so-called Islamic investment schemes that were mushrooming in the country including the famous case of al-Rayyan Investment  Scheme. The difference is that the government of the day at that time had a very different attitude toward Islamic finance and about anything Islamic generally.

SUKUK BACKED BY MIXED ASSET

SUKUK BACKED BY MIXED ASSET


Sukuk literally means “pieces of paper” or “documents that acknowledge something.” In a commercial sense it refers to instruments used in Islamic finance to allow one party to raise capital or funds in the capital market with the issuance of sukuk papers that list the rights and obligations of all parties involved in a transaction. Even though sukuk are sometimes referred to as Islamic bonds, they are not bonds in the conventional sense as holders of the former are not supposed to expect a fixed rate of returns from their purchase of these securities, as is the case with conventional bond holders. In the case of sukuk, what is important is that holders of the certificates must own the underlying assets to justify returns which are not fixed but are tied to actual returns/incomes generated by the assets owned. Hence, in the case of sukuk musharakah, for example, investors are sold portions of assets to be used in business. Returns to holders are in fact income or profit earned from the use of the assets in a manner specified in the sukuk contracts.

ISLAMIC BANKS AND HOUSES UNDER CONSTRUCTION

ISLAMIC BANKS AND THE SALE OF HOUSES UNDER CONSTRUCTION: WHERE IS THE FAULT?

Issues have been recently raised about the predicament faced by consumers who have to suffer due to houses they purchased using Islamic banking facilities provided by Islamic banks in Malaysia. According to one report by Islamic Consumer Association of Malaysia (PPIM) complaints received by the association from consumers about house financing   in the past couples of years run into thousands mostly related to non-delivery of the purchased houses due to abandoned housing projects. Many parties have voiced their displeasure at the way the relevant financing is done and called for an immediate review by competent Shariah authority to address injustice to the consumers. What is more damaging, it has been said, the good name of Islam has been compromised by such a banking practice resorted to by the so-called Islamic banks.