Statistical Reports

A comprehensive governance, regulatory and supervisory framework is required for the financial market to operate on a sound footing. The presence of a conducive and efficient regulatory environment not only helps promote market stability but also adds to the confidence and trust of the investors, public and other stakeholders. Since the inception of the Islamic finance industry, domestic regulators and international standard-setting bodies have strived to develop suitable regulatory and governance frameworks that cater for the unique nature and specific risks of Islamic financial institutions (IFIs). Regulators have been instrumental in supporting the development of the industry via ensuring clarity through appropriate regulations, gradual harmonisation of industry standards, robust Shari’a governance frameworks and a supportive legislative infrastructure. These measures, which are underway in Asia, the Middle East, Europe and even in sub-Saharan Africa lately, are critical for the smooth and sustainable expansion of the industry. Despite this, variations in Shari’a interpretations and differences in the Shari’a governance frameworks can result in legal uncertainties and hamper the potential growth prospects of the industry by decreasing stakeholders’ confidence. Therefore, the efforts by international organisations like the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the Islamic Financial Services Board (IFSB) and the International Islamic Financial Market (IIFM) in terms of standardisation and harmonisation of the Shari’a governance, Shari’a interpretation and market practices are key for the sustainability of the industry

The global sukuk market contracted 6% y-o-y in 2022 to USD154 bil, driven mainly by a drop in sukuk issuances from key market players, more specifically the GCC and Indonesia. In the GCC region, the Ukraine conflict resulted in supply chain disruptions which resulted in higher oil prices. This led to lower funding requirements by the GCC government and consequently, smaller sovereign sukuk issuances. Inflationary pressures, rate hiking throughout the year and geopolitical tensions created an unfavourable economic environment for most of global issuers as well. Despite that, the global sukuk market fared well considering the record number of rate hikes in 2022. Malaysia and Saudi Arabia remained as the two largest sukuk issuers commanding 63% of issuances in 2022. Sovereign sukuk was the mainstay form of sukuk issuance constituting 57.3% of the total. Corporate sukuk issuances staged a comeback in 4Q 2022, largely contributed by Malaysian corporates, after consecutive quarters of decline demonstrating promising signs of recovery going into 2023 as rates are expected to stabilise. The green and sustainability sukuk market experienced a new high of US$8.1 bil issuances in 2022 (2021: US$6 bil, unlike the wider global sukuk market). Demand was driven mainly by investors with ESG-centric investment mandates. This trend is expected to continue into 2023 as the current supply of ESG shariah-compliant issuances fall short of this demand. Notable issuances included Dubai Islamic Bank's US$750 mil sustainable Sukuk in November 2022.

A summary of some Q3 2014 sukuk issuances are presented along with ISRA's views on the sukuk tradability, transaction flow and shariah compliance. The following sukuk are reviewed from Bumi Armada Capital Sdn Bhd, Bumitama Agri Ltd, Hong Kong Sukuk 2014 Limited, Perusahaan Penerbit SBSN Indonesia III, and Perbadanan Tabung Pendidikan Tinggi Nasional.