Sukuk Al Ijarah as Alternartive for Property Financing
SUKUK AL-IJARAH AS ALTERNATIVE FOR PROPERTY DEVELOPMENT FINANCING
OVERVIEW IN MALAYSIA MARKET
By
Razlan Bin Raghazli
1200248
International Centre for Education in Islamic Finance
Malaysia
July 08, 2012
June – August 2012
Sukuk Al-Ijarah as an Alternative for Project Financing Overview of Malaysian Property Development Razlan Raghazli June 2010
1.0 Introduction
Nowadays, the funding from Islamic Finance Product is highly demanded not only from the consumer market, but also from the corporate organisation and public sector. According to the Bank Negara Malaysia Annual Banking Statistics 2007 (Malaysia, 2007), the Islamic Banking Assets in Malaysia reached USD6.5 billion with the average growth rate between 18% to 20% annually.
Islamic Finance comprises of several products such as Mudharabah, Murabahah, Bai Al-Istina, and sukuk (Saad, Ramli, & Aminuddin, 2011). These products were selected based on the suitability to finance the underlying assets and to be structured according to the financier and obligator’s requirements.
Figure 1 : Common structure of sukuk al-jarah
Source : Malaysia International Islamic Financial Centre
2.0 Literature Review
Sukuk are defined by the Accounting and Auditing Organisation for Islamic Financial Institution (AAOIFI) as certificates in ownership in a pool of underlying assets. Sukuk Al-Ijarah are certificates that carry equals value
Ijarah is a contract that may be executed for an asset undertaken by the lessor, to be delivered to the lessee according to the specification, even if the asset in not owned by the lessor (AAOIFI Shariah Standards 2010; Shariah Standard No. 9, paragraph 3/5, pg. 113).
Sukuk Al-Ijarah in principle is represents a shares in leased assets (pro-rata ownership in sukuk holders and each shares entitles to economic benefits under the lease (Rabiah Adawiah; 2010).
Sukuk Al-Ijarah is divided into Purchase Agreement and Lease
OVERVIEW IN MALAYSIA MARKET
By
Razlan Bin Raghazli
1200248
International Centre for Education in Islamic Finance
Malaysia
July 08, 2012
June – August 2012
Sukuk Al-Ijarah as an Alternative for Project Financing Overview of Malaysian Property Development Razlan Raghazli June 2010
1.0 Introduction
Nowadays, the funding from Islamic Finance Product is highly demanded not only from the consumer market, but also from the corporate organisation and public sector. According to the Bank Negara Malaysia Annual Banking Statistics 2007 (Malaysia, 2007), the Islamic Banking Assets in Malaysia reached USD6.5 billion with the average growth rate between 18% to 20% annually.
Islamic Finance comprises of several products such as Mudharabah, Murabahah, Bai Al-Istina, and sukuk (Saad, Ramli, & Aminuddin, 2011). These products were selected based on the suitability to finance the underlying assets and to be structured according to the financier and obligator’s requirements.
Figure 1 : Common structure of sukuk al-jarah
Source : Malaysia International Islamic Financial Centre
2.0 Literature Review
Sukuk are defined by the Accounting and Auditing Organisation for Islamic Financial Institution (AAOIFI) as certificates in ownership in a pool of underlying assets. Sukuk Al-Ijarah are certificates that carry equals value
Ijarah is a contract that may be executed for an asset undertaken by the lessor, to be delivered to the lessee according to the specification, even if the asset in not owned by the lessor (AAOIFI Shariah Standards 2010; Shariah Standard No. 9, paragraph 3/5, pg. 113).
Sukuk Al-Ijarah in principle is represents a shares in leased assets (pro-rata ownership in sukuk holders and each shares entitles to economic benefits under the lease (Rabiah Adawiah; 2010).
Sukuk Al-Ijarah is divided into Purchase Agreement and Lease