The potential and future of sukuk amid the changing capital markets landscape was the focus of the conference that was jointly organised by Amanie Group and Malaysian Rating Corporation Berhad (MARC) held at the Securities Commission from September 20 - 21, 2018.
The one-and-a-half-day conference saw local and foreign Shariah, legal and finance experts discuss and deliberate on a wide range of topics related to sukuk, from practical issues in structuring sukuk to the potential for applying blockchain technology to sukuk transactions.
The conference started with an opening address by Datuk Dr. Mohd Daud Bakar, Founder and Executive Chairman of Amanie Group, welcoming attendees. The keynote speech was given by YB Dato’ Ir. Haji Amiruddin Hamzah, Deputy Finance Minister, Ministry of Finance Malaysia.
The first panel session, which was moderated by Datuk Dr. Mohd Daud Bakar, delved into the integration of environmental, social and governance (ESG) aspects in sukuk investment and sukuk’s enormous potential in furthering environmental and social sustainability. The importance of credit ratings in the efficient functioning of the sukuk market was also underlined during a subsequent panel session moderated by MARC’s Ahmad Feizal. The need for a strong disclosure regime augmented by independent credit ratings is further underscored by the Securities Commission Malaysia’s recent announcement on the liberalisation of its regulatory framework to enhance retail participation in sukuk and bonds.
A special presentation on sukuk blockchaining, meanwhile, showed how blockchain technology may be harnessed to promote greater investor and issuer participation in sukuk. The conference wrapped up its first day’s proceedings with a session discussing a high-profile sukuk default which highlighted the potentially dire consequences of differences in the interpretation of Shariah standards and emphasised on the need for a centralised Shariah framework. Self-regulation, while providing flexibility in the early phase of market development, can subsequently become an obstacle to further growth.
The sessions on the second day of the conference explored future approaches to structuring sukuk as well as the potential of Industry 4.0 technologies to revolutionise sukuk, going forward. Innovation has been integral in the growth of sukuk as witnessed in the continued evolution of sukuk structures amid the ongoing debate regarding asset-backed and asset-based sukuk. Optimism was voiced as to the capability of market players to innovate and introduce new assets and structures that will create tomorrow’s opportunities for sukuk investors.
MARC’s Chief Executive Officer, Sabrina Kan Wai Sum, delivered her closing remarks in which she summed up the key messages from the conference’s six sessions. After stating that the sessions had generated a consensus view that growth prospects for the sukuk market remain tremendous, she further commented: “The challenge that remains is to overcome impediments to the global sukuk market’s potential growth, in particular the uncertainties arising from legal regimes, differing Shariah interpretations and ambiguity with regard to investors’ rights and remedies in default circumstances.”
The conference was attended by numerous representatives from policy-makers, regulatory authorities, corporates, financial institutions, fund management firms, law firms and other stakeholders.