Islamic Financial Products and Processes

1

2
Islamic Financial Products and
Processes Muhammad Faisal Shaikh
BankIslami Pakistan Ltd.
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Islamic Sukuk- Introduction
Bonds are important part of overall financial
system. Well developed bond markets ensures
stable financial system as it minimize
over-reliance on financing from the banking
sector. The development of the bond market
allows for access to funding with the appropriate
maturities, thus avoiding the funding mismatches.
It also allows for the diversification of risks
by issuers and investors.

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Islamic Sukuk- Introduction

• Dealing in Bonds is not permissible according to
  Shariah because of two aspects.
• Firstly, they represent a portion of Debt payable
  by the issuer. Earning any kind of profit falls
  under the category of RIBA as defined in the
  Hadith

Every loan that draws any premium is Riba.
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Islamic Sukuk- Introduction

• Second aspect pertain to the trading of Bonds.
• Shariah prohibits trading of debts (Bai Dayn) as
  it involves Gharar.

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Islamic Sukuk- Introduction

• Sukuks are developed as alternative of Bonds.
• A Sukuk represents proportionate actual or
  beneficial ownership in an Asset or a Pool of
  identified assets.
• For a defined period the Risk and Return
  associated with such Assets belong to Sukuk
  holders which makes their return permissible for
  the holder.

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Islamic Sukuk- Introduction

Trade of such Sukuks is permissible, because it
will be equivalent to the sale/ purchase of
holders proportionate share in the assets.
However, trading of Murabahah and Salam Sukuks
is not permissible.
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Islamic Sukuk- Difference with Bonds

Sukuks Represents the direct pro rata ownership
of the holder in the assets of the pool. Sukuk
holder generally earn return from income
generated through the asset
Conventional Bond The bond stands for a loan
repayable to the holder in any case, and mostly
with interest.
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Islamic Sukuk- International Overview

• Cumulative issuance outstanding topped the
  symbolic bar of 100 billion.
• Malaysia became the No. 1 issuing country with
  54.1 of the value of sukuk issued.
• The dollar made a partial comeback but local
  currencies were the denomination of choice for
  sukuk issuance.
• Big new players tapped the market like General
  Electric Capital Corp. and International Finance
  Corporation.

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Islamic Sukuk- International Overview
The 2010 pipeline remains healthy with about 20
billion of sukuk publicly announced in the past
that is likely to come to market if conditions
permit. In addition to these unofficial market
sources says that about 10 billion more could
potentially enter the pipeline. If that comes to
market, total sukuk issuance in 2010 could
approach the current 2007 record of 34.3 billion.
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Islamic Sukuk- International Overview

• The UK Treasury and the Financial Services
  Authority (FSA) have prepared an amendment in
  Financial Services and Markets Act 2000
  (Regulated Activities) Order 2001 (S.I. 2001/544)
  to remove barriers and uncertainty in the
  regulation of alternative finance investment
  bonds (sukuk).
• Following consultation with the industry, the
  statutory instrument, the Financial Services and
  Markets Act 2000 Order 2010, was sent to the
  House of Commons in mid-January, and the Brown
  government is confident that the new regulations
  will come into effect by the end of February.
  These measures will reduce compliance and legal
  costs for these instruments, and facilitate the
  issuance of corporate sukuk in the UK.

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Islamic Sukuk- International Overview

The governments objectives on Islamic finance,
reiterated Exchequer Secretary to the Treasury
Sarah McCarthy-Fry, MP, are to enhance the UKs
competitiveness in financial services by
maintaining the UKs position as a Western leader
for international Islamic finance and to ensure
that everybody, irrespective of their religious
beliefs, has access to competitively priced
financial products. This measure is another
important step in the development of the Islamic
finance sector in the UK and will help to provide
a level playing field for Islamic financial
products in this country. It is good news for the
UK economy and for our Islamic finance industry.
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Islamic Sukuk- International Overview

• Luxembourg took an important first step toward
  developing the Duchy into the latest European hub
  for Islamic finance, especially Islamic capital
  markets, when it published a new tax circular on
  the treatment of a whole range of Islamic finance
  products including Murabaha, Musharaka,
  mudarabah, istisna, ijarah, ijarah wa Iktina and
  sukuk (Islamic bonds).
• The circular confirms the classification of sukuk
  as debt for Luxembourg tax purposes.
  Consequently, yield payments under the sukuk are
  treated under domestic tax law as deductible
  interest expenses at the level of the paying
  entity.

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Islamic Sukuk- International Overview

• Under the Finance Bill 2010, which came into
  effect in January 2010, the Irish Ministry of
  Finance has introduced significant amendments to
  facilitate Islamic finance transactions in
  Ireland.
• The legislation clarifies that the Sukuk
  Certificate should be considered a security and
  confirms that the investment return on that
  certificate should be treated as interest on a
  security for the purposes of the Taxes Act
  (subject to restrictions).
• The bill also introduces amendments to the stamp
  acts to ensure that no stamp duty will arise on
  the issue, transfer or redemption of a sukuk
  certificate.

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Islamic Sukuk- International Overview

• The Strategy and Finance Committee of the Korea's
  National Assembly (Parliament) is set to approve
  a bill aimed at facilitating tax neutrality for
  the issuance of sukuk in Korea during its next
  sitting at the end of February 2010.

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Islamic Sukuk- Local Overview

• In Pakistan, the first Islamic Sukuk was issued
  in 2002 when Sitara Chemicals Industries issued
  its MTFC.
• However, the market really started in FY 2005 and
  since then Sukuks worth at least Rs. 30 billion
  has been issued or are in the process of
  issuance.
• Market is growing at a very healthy rate as large
  corporates and conglomerates such as WAPDA, Engro
  Chemicals, PEL, EDEN Developers, Maple Leaf
  Cement, etc are using Sukuk to fund their
  requirements.

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Islamic Sukuk- Types

• The issuance of Sukuk requires an exchange of a
  Shariah compliant underlying asset for a
  financial consideration through the application
  of various Islamic commercial contracts such as
  the Mudarabah, Musharakah, Ijarah, Istisna, Salam
  and Murabahah.
• The equity-based nature of Mudarabah and
  Musharakah Sukuk exposes investors to the risks
  connected with the performance of the project for
  which the financing is raised.

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Islamic Sukuk- Types
In contrast, issuance of Sukuk on principles of
Ijarah and Murabahah yields deterministic
receivable and hence result in predictable and
somewhat fixed returns for the prospective
investors.
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Sukuk Al Ijarah
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Islamic Sukuk- Sukuk Al Ijarah

• Ijarah is an Islamic alternate of conventional
  leasing.
• Issuing certificates of ownership of assets,
  leased to a particular customer is known as Sukuk
  Al Ijarah or simply Ijarah Sukuk.
• Ijarah Sukuk concept is one of the most popular
  concepts among issuers of global Islamic Sukuk.
• A simple process is explained next.

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Islamic Sukuk- Sukuk Al Ijarah

• If a Company requires, for example, Rs. 500
  million for the purchase of land, real asset,
  equipment etc it can issue Ijarah sukuk equaling
  that amount in small denominations, say Rs.
  500,000 each.
• After collection of funds from the investors the
  company either purchases the asset on behalf of
  the Sukuk investors or transfers the ownership of
  the already acquired asset to sukuk holders
  usually by establishing a Special Purpose Vehicle
  (SPV), which owns the underlying assets.

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Islamic Sukuk- Sukuk Al Ijarah

• The investor or sukuk holders owns the asset held
  by SPV as Trustee in the form of Sukuk. The asset
  is then leased to the firm and the lease proceeds
  from the asset is distributed to the sukuk
  holders as return/dividend.
• The returns on the sukuk certificates could be
  either fixed or floating. As the expected returns
  (pre-determined rental payments) are fixed and
  can be treated as predictable like the coupon
  payments of a conventional bond.

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Islamic Sukuk- Sukuk Al Ijarah

• Ijarah sukuk can be issued through a financial
  intermediary, a bank or a brokerage house or
  directly by the users of the lease asset. A third
  party can also guarantee rental payments.
• Since the yield is predetermined and the
  underlying assets are not liquid but tangible and
  secured, thus the Ijarah certificate can be
  freely traded in the secondary markets at par,
  premium or discount.

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Sukuk Al Ijarah Structure
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ABC Ltd. (Corporate)
ABC Ltd. wishes to purchase a new asset and plan
to raise finance through issuance of Islamic
Sukuk.
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Supplier
Supplier of the Asset is identified and
negotiations is finalized by ABC Ltd.
ABC Ltd.
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Issuer SPV (LLC 100 owned ABC Ltd.)
Supplier
ABC Ltd.
SPV is created by ABC Ltd. as a limited liability
Company.
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SPV issues certificates and receives proceeds
which are used to purchase asset from the supplier

Supplier
Supplier
Supplier
Issuer SPV (LLC 100 owned ABC Ltd.)
Payment made to Supplier Title is transferred to
SPV
Payment made to Supplier Title is transferred to
SPV
Payment made to Supplier Title is transferred to
SPV
Investors
ABC Ltd.
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SPV holds Asset as Trustee and leases the plant
to ABC Ltd. as per rules of Ijarah

Issuer SPV
SPV holds Plant/ Asset as Trustee
Investor
ABC Ltd.
SPV leases Plant to ABC Ltd. on Ijarah
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Issuer SPV
ABC Ltd. (Lessee)
Investors
Semi-annual coupon distribution amounts
Periodic Lease Rentals
ABC Ltd. (Lessee) pays periodic rentals to SPV
for tenors amounts matching the coupon tenor
of the Sukuks
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Exercises the purchase undertaking. Asset
transferred to ABC Ltd.
Issuer SPV
Investors
ABC Ltd. (Lessee)
Pays the exercise price at dissolution
Redeems the Trust Certificates at dissolution
ABC Ltd (Lessee) give the SPV an irrevocable
purchase undertaking to purchase the Asset at
maturity. Exercise Price Initial Purchase Price
of Asset service costs. Asset is transferred
back on maturity, upon payment of the Exercise
Price to the SPV / Sukuk Holders.
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Islamic Sukuk-Sukuk Al Ijarah

Important Conditions

• Ijarah Sukuk represents the holder's
  proportionate ownership in the leased asset.
• The holder will assume the rights and obligations
  of the owner/lessor to the extent of his
  ownership.
• As owner the holder will have the right to enjoy
  a part of the rent according to his proportion of
  ownership in the asset.

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Islamic Sukuk-Sukuk Al Ijarah

Important Conditions

• In the case of total destruction of the asset,
  holder will suffer the loss to the extent of his
  ownership.
• SPV rules in Pakistan does not allow SPV to hold
  actual tangible assets, therefore, the asset is
  shown on the books of the client itself instead
  of SPV.

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Islamic Sukuk-Sukuk Al Ijarah


Essential Condition Its essential that the
Ijarah Sukuks are designed to represent real
ownership of the leased assets, and not only a
right to receive rent.
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Islamic Sukuk-Sukuk Al Ijarah

Innovation in Pakistan

• In Pakistan essentialy the same structure has
  been used to develop Sukuks based on Diminishing
  Musharakah.

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Islamic Sukuk-Sukuk Al Ijarah

• Innovation in Pakistan
• There are two basic differences in Diminishing
  Musharakah Sukuks
• Underlying Assets is jointly owned by investors
  and issuer according to specified percentage.
• Ownership is also transferred periodically to the
  issuer.
• Ijarah is essential part of a Diminshing
  Musharakah transaction under Shirkatul Milk.

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Islamic Sukuk-Sukuk Al Ijarah
Documentation
Documents executed in a Sukuk Issue based on
Diminishing Musharakah (under Shirkat-ul-Milk
arrangement) are 1. Investment Agency
Agreement 2. Asset Purchase Agreement 3. Musharak
ah Agreement 4. Service Agency Agreement 5. Paymen
t Agreement 6. Undertaking to Purchase Sukuk
Units 7. Undertaking to Sell Sukuk Units 8. Trust
Deed 9. Letter of Hypothecation/Other Security
Documents
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Islamic Sukuk-Sukuk Al Ijarah
Investment Agency Agreement Through this
Agreement, all Participating Islamic Financial
Institutions ('Investors') appoint a Bank/FI as
'Investment Agent' to carry out all actions
(including entering into all Sukuk related
Transaction documents) for and on behalf of all
Investors in respect of Sukuk Issue.
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Islamic Sukuk-Sukuk Al Ijarah

• Asset Purchase Agreement
• Investment Agent (acting for and on behalf of
  Investors) buys undivided beneficial ownership in
  specified fixed assets ('Musharakah Assets') in
  partnership with Issuer at a pre-agreed price
  (equivalent to the Sukuk Issue Amount) via the
  Asset Purchase Agreement.
• Legal title of the assets remains with the Issuer
  and only the beneficial title will remain with
  the Investors.

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Islamic Sukuk-Sukuk Al Ijarah
Asset Purchase Agreement Musharakah Assets can
be (i) Already existing, and owned by the
Issuer. This would become a Sale and Lease Back
(SLB) case. SLB cases are done only after
approval of Shariah Adviser and are undertaken
mainly to settle existing conventional banking
loans of Issuer. (ii) New, and would be
purchased from third party. E.g. fixed assets
purchased for expansion projects.
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Islamic Sukuk-Sukuk Al Ijarah

• Musharakah Agreement
• Investment Agent (acting for and on behalf of
  Investors) and Issuer will enter into a
  Musharakah Agreement to jointly own Musharaka
  Assets.
• Each Investors entitlement to the Musharakah
  Assets will be undivided and shall for the
  purpose of more particular determination
  constitute of Sukuk Units. Share of each
  Co-Owner will be specified in the Musharakah
  Agreement.

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Islamic Sukuk-Sukuk Al Ijarah
Service Agency Agreement Issuer is appointed
'Service Agent' via signing of Service Agency
Agreement between Investment Agent (acting for
and on behalf of Investors) and Issuer. Service
Agent will be responsible for (i)Ensuring all
major maintenance of the Musharakah Assets
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Islamic Sukuk-Sukuk Al Ijarah

• Service Agency Agreement
• (ii) Paying ownership related expenses and taxes
  and
• (iii)Arranging Takaful/ Insurance of the
  Musharakah Assets.
• Such ownership related expenses/taxes incurred by
  Service Agent on behalf of Musharakah Co-Owners
  will be reimbursable from Investment Agent.

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Islamic Sukuk-Sukuk Al Ijarah

• Payment Agreement
• Investment Agent (acting for and on behalf of
  Investors) will allow Issuer to use Investors'
  share of the Musharakah Assets against periodical
  KIBOR-benchmarked Rental Payments in terms of the
  Payment Agreement.
• From Shariah perspective, this is basically an
  Ijarah Agreement. The tenor of the Payment
  Agreement will be matched with the Musharakah
  tenor.

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Islamic Sukuk-Sukuk Al Ijarah
Undertaking to Purchase Sukuk Units Undertaking
to Purchase Sukuk Units is a promise undertaken
by Issuer in favor of the Investment Agent for
(i) the periodical purchase of Sukuk Units
(representing Investors' undivided beneficial
ownership in the Musharakah Assets) and (ii)
the purchase of all outstanding Investors' Sukuk
Units in case of an Event of Default.
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Islamic Sukuk-Sukuk Al Ijarah
Undertaking to Sell Sukuk Units Undertaking to
Sell Sukuk Units is a promise undertaken by the
Investment Agent in favor of Issuer granting a
call option to Issuer to purchase all or part of
the Sukuk Units. In SLB cases, purchase/sale of
Sukuk Units will only start after at least one
year from the Musharakah Commencement Date/Asset
Purchase Date.
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Islamic Sukuk-Sukuk Al Ijarah
Trust Deed Trust Deed will be executed between
Trustee (appointed by Investors for the Sukuk
Issue) and Issuer detailing the responsibilities
of the Trustee during the tenor of the Sukuk
Issue.
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Islamic Sukuk-Sukuk Al Ijarah
9. Letter of Hypothecation/Other Security
Documents Letter of Hypothecation and Other
related Security Documents will be executed by
Issuer in favor of Trustee for security purposes.
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Sukuk Al Salam
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Islamic Sukuk-Sukuk Al Salam

• Salam is an Islamic mode of finance. Under a
  Salam transaction the seller makes an advance
  payment for goods which are to be delivered later
  provided the goods are defined and the date of
  delivery is fixed
• Government of Bahrain first issued Salam Sukuks
  as an alternate to short term government treasury
  bill.

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Islamic Sukuk-Sukuk Al Salam

• Under the transaction Government took an advance
  payment from the investors for a future delivery
  of Aluminum ingots. A paper was issued as an
  acknowledgment of receipt which is known as Salam
  Sukuk.
• Upon delivery of Aluminum ingots to the investors
  at the time of completion of Salam contract,
  Government sold ingots to third parties as agent
  of the investors.
• The difference between Sale and Purchase price
  was the profit of the investors.

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Islamic Sukuk-Sukuk Al Salam
On the same lines Government of Pakistan can also
issue Salam Sukuks to cater to the short term
liquidity management issues of Islamic Banks. A
proposed structure is discussed next.
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Islamic Sukuk-Sukuk Al Salam

• On behalf of Govt. of Pakistan, Zarai Taraqiati
  Bank Limited (ZTBL) may sell the commodity to the
  buyers on Salam basis which in this case would be
  Islamic Banks.
• In this transaction, various banks may
  participate in the Sukuk and one Bank would act
  as trustee nominated to represent other banks
  wishing to participate in the Al Salam contract.

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Islamic Sukuk-Sukuk Al Salam
As consideration for advance payment, ZTBL will
undertake to supply a specified amount of a
commodity say wheat at a future date. ZTBL would
arrange the commodity by providing Shariah
compliant funding to farmer e.g. It may purchase
wheat on the basis of Salam from the farmers.
Simultaneously a third party such as PASSCO
may provide an undertaking to the Trustee to
purchase wheat at an specified higher price thus
ensuring profit of the investor banks.
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Islamic Sukuk-Sukuk Al Salam

• Upon delivery Trustee would appoint PASSCO its
  agent to take delivery from ZTBL.
• After taking delivery its premises PASSCO will
  inform the Trustee which would sell the wheat to
  PASSCO.
• Payment received from PASSCO would be distributed
  among the investor banks along with the profit.
• Banks may also provide funding on the basis of
  Murabahah to PASSCO for the purchase of same
  wheat.

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Islamic Sukuk-Sukuk Al Salam
Important Conditions
Salam Sukuk represent investors shares in the
Advance Price paid to the seller. Since its a
dayn, it cannot be traded in the secondary
market.
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Islamic Sukuk-Sukuk Al Murabahah

• Sukuks can also be issued against a Murabahah
  transaction. Under the transaction investors
  would provide funding to purchase some assets for
  the issuer. Acknowledgment of their investment
  would be regarded as Murabahah Sukuk.
• The asset would be purchased from its supplier
  and would be immediately sold to the issuer
  against deferred price.
• Profit earned from the transaction would be
  distributed among the investor proportionately.

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Islamic Sukuk-Sukuk Al Murabahah
Important Conditions

• Murabahah Sukuk represent investors shares in
  receivable from the purchaser
• Since its dayn, it cannot be traded in the
  secondary market.

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Sukuk Al Musharakah
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Islamic Sukuk-Sukuk Al Musharakah

• Musharakah is a mode of financing against which
  Sukuks can be issued.
• If a comapany required financing for any of its
  project through Musharakah it can issue Sukuks
  against which investors would provide funding as
  per the rules of Musharakah.

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Islamic Sukuk-Sukuk Al Musharakah

• Every Sukuk would represent holder's
  proportionate ownership in the assets of the
  Musharakah.
• Once the majority of the cash amount is converted
  into fixed assets, these Musharakah Sukuk can be
  treated as negotiable instruments in the
  secondary market.
• .

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Islamic Sukuk-Sukuk Al Musharakah
Important Conditions

• Profit earned by the Musharakah is shared
  according to an agreed ratio between the Issuer
  and Investors at an agreed ratio.
• Loss is shared on pro rata basis.
• Profit Loss is shared between the investors as
  per investment ratio only.

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Islamic Sukuk-Sukuk Al Musharakah
Important Conditions

• To ensure tradability of the Sukuks following
  condition should be adhered to
• All the assets of the Musharakah should not be in
  liquid form.
• At least 20 of the value of Portfolio should be
  invested in non-liquid assets.

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Islamic Sukuk-Sukuk Al Musharakah
Musharakah Sukuks can be used for number of
purposes including Construction of Projects and
factories Expansion Projects Working Capital
Finance Sitara's Musharakah's TFC advised and
arranged by Meezan Bank Ltd. is an excellent
example of a Musharakah Sukuks.
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Musharakah Term Finance Certificates by Sitara
Chemicals Industries Ltd
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Islamic Sukuk-Sukuk Al Musharakah

• Sitara Chemical Industries Limited
• Incorporated In Year 1981, Listed on All Stock
  Exchanges in Pakistan.
• Commencement Of Commercial Production in 1984.
• The Companys Core Business is Manufacturing of
  Caustic Soda - Largest Producer Of Caustic Soda
  In Pakistan.

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Islamic Sukuk-Sukuk Al Musharakah
Issuer Sitara Chemical Ind. Total Issue Size
Rs. 360 Million Private Placement Rs. 255
Million Public Issue Rs. 105 Million Tenor 5
years (Aggregate) Profit Payment Six
monthly Based on profit and loss sharing on the
Operating profits of the Chemicals Division
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Islamic Sukuk-Sukuk Al Musharakah
Profit Loss Sharing
Profit was linked to the Operating Profit of the
Chemical Division. Level 1 Profit On First Rs.
100 Million Operating Profit _at_ 12 p.a. of the
Outstanding Principal. If Operating Profit is
less than Rs. 100 Million then Actual profit
entitlement rate (Actual Operating profit/
Rs.100 million) 12
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Islamic Sukuk-Sukuk Al Musharakah
Profit Loss Sharing
Level II Profit 2 p.a. of the outstanding
principal on each subsequent Rs. 100 million
operating profit(over and above first Rs. 100
Million). If operating profit falls between the
two brackets of Rs. 100 million then Profit
entitlement rate(Actual operating profit/Rs. 100
Million) 2
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Islamic Sukuk-Sukuk Al Musharakah
Profit Loss Sharing- Takaful Reserves

• The Company formed and maintains Takaful Reserve
  during the tenor of the TFCs to mitigate the risk
  of loss for the TFC holders.
• TFC holders also contributed 25 (1/4th ) of
  their level II Profit to Takaful reserve
  annually during the tenor of the TFCs.

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Islamic Sukuk-Sukuk Al Musharakah
Profit Loss Sharing- Takaful Reserves

• The Company transfered Rs 50mm in the reserve.
• In case of no losses during TFCs tenor the amount
  contributed by the company and TFC holders will
  be paid on final settlement.

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Islamic Sukuk-Other types

• Sukuks are also issued under other Islamic mode
  of finance and currently much focus is given
  Sukuk Al Intefah which is transfer of usufruct
  instead of ownership of the asset.
• Other types include Sukuk Al Muzar'a
  (sharecropping), Sukuk Al Musaqa (irrigation),
  Sukuk Al Mugharasa (agricultural) etc.

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Islamic Sukuk-Other types

• Sukuks are also issued under hybird structures
  where number of Islamic modes of finance are used
  to issue a single Sukuk.
• Under these structures each of Islamic mode is
  applied at different intervals to cater to
  different requirements of the issuer.
• .

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Islamic Sukuk-Standardization
AAOIFI has also issue Shariah standards for
Sukuks and its expected that issuance of these
standards would help reducing differences in
fatwas issued for Sukuks.
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Islamic Sukuk-Criticism

• Some Sukuks are criticized for their close
  resembelence with conventional bonds.
• Many times these closeness is created to adhere
  to the tax and other regulatory laws of the
  country.
• For example, in Pakistan SPVs cannot hold actual
  assets. For this reason assets cannot be carved
  out from the balance sheet of the issuer which
  creates complexities in identification of the
  assets and only a hypothecation charge ensures
  bank's benefical ownership in the Musharakah
  assets.
• .

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Islamic Sukuk-Criticism

• Similarly, concept of the Diminishing Musharakah
  financing is not there in the stamp duty laws of
  Pakistan, which compels banks to sell share in
  assets without any legal registration.
• It should be noted that concept of Diminishing
  Musharakah is recognized in British stamp duty
  laws since April 2003.
• Nevertheless, not all of this criticism is
  incorrect, and therefore it should be ensured
  that unesseccary usage of artificial structures
  should be avoided as much as possible.

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Islamic Sukuk-Criticism

• The problems could be resolved by Shariah rating
  systems
• This will help investors in making informed
  decisions regarding the authenticity of the
  Shariah structure of the Sukuk.

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Islamic Sukuk-Benefits

• Sukuk can be used very effectively as a halal
  alternate to conventional bonds for providing
  funding for matching maturities and without
  relying too much on commerical banking sector.
• Another aspect of Sukuks which make them more
  effective than bonds is there ability to mobilize
  and motivate investors to work for the overall
  benefit of the issuer.

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Islamic Sukuk-Benefits
Sukuks for Government Projects

• Sukuks based on Ijarah can be used very
  effectively to finance Government projects.
• If general public is involved in the construction
  of these project through issuance of Sukuks, it
  can give them sense of ownership.
• Effective usage of such Sukuk would increase the
  ratio of success and ratio of sustainability of
  the projects by many folds.
• .

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Islamic Sukuk-Benefits
Sukuks by Private Sector

• Corporate Sector can also benefit from unique
  characteristic of Sukuks.
• Musharakah Sukuks can be used to associate
  general customer with the company.
• Sense of ownership and share in the profit of the
  company can be used as a marketing tool for the
  products of the company especially in FMCG
  sector.

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Islamic Sukuk-Benefits
Sukuks by Private Sector
The more company earns the more return investor
would get concept can revolutionalize
sales. Even Sukuks Al Ijarah would help the
companies to position themselves as an caring
member of the society by involving community in
the business of the company.
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Islamic Sukuk-Conclusion

• Sukuks can be used very effectively to obtain
  Shariah Compliant funding which surely bring
  Allah's blessing and barakah for the business.
• Issuers can also benefit from the huge increase
  in liquidity in the Islamic world, and can tap on
  these new sources of funds. Raising funding from
  the Islamic bond market in the current
  environment has been 10 to 20 basis points lower
  than mainstream bonds.

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Islamic Sukuk-Conclusion
.And whosoever fears Allah and keeps his duty to
Him, He will make his matter easy for him...
(Surah Al Talaq Ayat 04)
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