Malaysia sukuk needs domestic education

Author: Brian Yap | Published: 20 Nov 2015

Counsel in Malaysia have called for greater education to be provided for domestic corporate issuers of sukuk, as increased emphasis on compliance with sharia law in onshore debt issuance has generated confusion.   

Malaysia’s Prime Minister Najib Razak announced in his budget speech last month that all onshore sharia-compliant loans would be given a 20% stamp duty exemption to reduce issuance costs of SRI sukuk.

But market participants have pointed to inadequate guidelines for issuers of sukuk who are often uncertain about whether their business operations remain shariah-compliant throughout the product's tenure.

"Some issuers are hesitant to venture into sukuk issuance because of the complexity of having an underlying transaction," said  Lilian Liew, partner at Zicolaw in Kuala Lumpur

Driven by the country’s desire to entice a larger pool of Middle East investors, Malaysia has seen a tightening of shariah compliance in the last few years.    ...