An Overview Of Sukuk Issuance And Their Contribution In Economic Empowerment

Abstract

As one of the most popular financial instruments under Islamic finance, Sukuk can easily create and ensure economic empowerment if properly mobilized and structured. That is what the Islamic finance theory has shown; Sukuk has a considerable ability to playing a notable role in curbing poverty and creating a proper environment for vulnerable populations, thus, enabling them to shift from being a social burden to a development booster. Sukuk offers viable alternative funding sources to deliver and provide critical infrastructures. Concretely, governments cannot fully fulfill their socio-economic role and create the appropriate necessary environment for economic activity. This situation implies, theoretically, that Sukuk can be used to fulfill governments‘ needs and supply the needed funds to create a good environment and a better livelihood. However, their use as an effective means of economic empowerment is still shyly expanding and widening. This paper studies to what extent does Sukuk issuance serve the objectives of Islamic finance and insures its empowering and financial equality and support goals, through a theoretical overview regarding the scope of their use as an economic empowerment tool and an overview of the multiple experiences of Southeast Asian countries (Malaysia and Indonesia) and international financial institutions in using Sukuk for this role. We will present an overview of actual international cases in which Sukuk has been successfully mobilized to accomplish economic empowerment. Then we will face the impact of these experiences on the effect in combing poverty and empowering vulnerable populations that are awaited from Sukuk issuances. Our study will be completed by an investigation of the various barriers and key challenges impeding and obstructing a larger issuance, capable of bringing more enhanced empowering effect and of setting Sukuk and Islamic finance in general in its natural position: leading the economy for better achievements and bettering the livelihoods of the population.