Sukuk akan Dikenakan Pajak

Republika: Sabtu, 10 Maret 2007

JAKARTA -- Pemerintah berniat mengenakan pungutan pajak atas setiap transaksi obligasi syariah (sukuk) yang dilakukan di Indonesia. Aturan mengenai pungutan pajak itu akan dimasukkan dalam paket UU Perpajakan yang amandemennya diharapkan selesai satu atau dua bulan mendatang.

Rencana pengenaan pajak sukuk itu kemarin (9/3) diungkap oleh Wakil Presiden Jusuf Kalla ketika menerima rombongan Kadin Malaysia di kantornya di Jakarta. Dalam pertemuan sekitar satu jam itu, Wapres menyempatkan diri berdialog dengan para pengusaha dari negeri jiran itu. ''Sukuk akan diselesaikan dengan UU Pajak yang baru,'' ungkapnya ketika menjawab pertanyaan peserta.

Wapres mengakui pengenaan pajak atas sukuk itu lantaran obligasi yang berlandaskan syariah Islam itu dianggap sebagai bagian dari transaksi. Secara pisik seakan-akan terjadi transaksi yang di Indonesia selalu dikenakan pajak. ''Itu hanya formulated transaction,'' ujarnya.

Sesuai dengan hukum perpajakan di Indonesia, setiap transaksi dikenakan pajak. Ia memperkirakan hasil amandemen UU Pajak itu akan diselesaikan pembahasannya di DPR satu atau dua bulan ke depan. Dengan adanya kejelasan status hukum sukuk itu diharapkannya investasi portofolio di tanah air bisa berkembang lebih pesat lagi. ''Kita kan kemarin belum ada transaksi sukuk, tapi (Ditjen) pajak bilang itu harus bayar pajak,'' tegasnya.

Sementara bagi investor, selama ini sukuk dipandang tidak layak dikenakan pajak lantaran dianggap sebagai pay on paper transaction. Wapres memandang pendapat seperti itu bisa saja diutarakan. Namun untuk kepastian hukum, ia berpendapat transaksi sukuk ini memang sebaiknya diatur dalam UU Perpajakan. Kebijakan ini, lanjutnya, juga dimaksudkan sebagai inovasi baru dalam sistem keuangan. ''Karena kalau kita tidak ikuti, kita akan ketinggalan banyak,'' jelasnya.

Dalam pertemuan itu, Wapres juga mengungkapkan penuntasan amandemen UU Penanaman Modal. Ia memperkirakan amandemen UU itu selesai bersamaan dengan paket UU Perpajakan, yaitu satu atau dua bulan lagi. Amandemen UU itu dilakukan untuk membuat iklim investasi di Indonesia semakin kompetitif dibanding dengan negara lain. ''Kalau Indonesia berbeda jauh dengan Malaysia, tentu menyulitkan,'' katanya.

Sukuk dan Obligasi Konvensional Sama-sama Diminati

Republika: Rabu, 05 Desember 2007

Menjadi negara berpenduduk mayoritas Muslim tak menjamin sektor ekonomi yang tumbuh hanya sektor keuangan syariah. Fakta ini terlihat di berbagai negara Timur Tengah yang berpenduduk mayoritas Muslim.

Berdasarkan data hasil pengkajian firma hukum internasional, Trowers & Hamlins, di wilayah tersebut, nilai obligasi konvensional hingga Juni lalu tercatat meningkat dua kali lipat menjadi 11,1 miliar dolar AS dibandingkan tahun lalu 5,1 miliar dolar AS. Sedangkan, dalam tiga tahun terakhir, penerbitan obligasi konvensional di Timur Tengah telah meningkat signifikan dari hanya 964 juta dolar AS. Fakta tersebut menunjukkan tidak hanya sukuk yang tumbuh pesat di Timur Tengah, tapi juga obligasi konvensional.

Menurut Adrian Creed dari Trowers & Hamlins sebagaimana dilansir situs berita www.ameinfo.com, Selasa, (12/4), salah satu pemicu meningkatnya pertumbuhan obligasi konvensional di Timur Tengah karena dilatarbelakangi pertumbuhan sukuk di wilayah tersebut. Hingga akhir Juni lalu, sukuk yang diterbitkan di Timur Tengah meningkat dua kali lipat lebih menjadi 14,5 miliar dolar AS dari penerbitan periode serupa tahun lalu, 5,1 miliar dolar AS.

Hingga akhir tahun lalu, penggunaan sukuk sebagai instrumen penjaring dana investasi bagi berbagai perusahaan di Timur Tengah mengkomposisi sekitar 57 persen penerbitan obligasi. Meski demikian, hingga Juni lalu, sukuk masih mendominasi penerbitan pasar obligasi di Timur Tengah.

Adrian menyebutkan, cukup banyaknya obligasi konvensional yang diterbitkan di Timur Tengah menunjukkan bahwa investor Timur Tengah cukup rasional dalam menginvestasikan dana mereka. Bagi mereka, salah satu hal penting yang menjadi pertimbangan dalam menempatkan dana adalah tingkat kompetitif dari return yang dimiliki suatu instrumen investasi. Sehingga mendorong perusahaan di Timur Tengah tidak hanya menggunakan sukuk untuk menjaring dana investasi, tapi juga obligasi konvensional. `'Perusahaan Teluk tidak hanya berkomitmen pada sukuk. Mereka akan menggunakan obligasi konvensional atau melakukan right issue bila dipandang sesuai dan menguntungkan. Contohnya, penjaringan dana investasi baru-baru ini oleh DP World dengan menerbitkan sukuk senilai 1,5 miliar dolar AS bertenor 10 tahun dan obligasi konvensional 1,75 miliar dolar AS bertenor 30 tahun,'' katanya.

Mengenai sukuk, Adrian memprediksi, sukuk di Timur Tengah akan terus berkembang pesat dalam beberapa tahun mendatang. Hal tersebut dipicu oleh tingginya harga minyak dunia. Hal tersebut karena tingginya harga minyak mendorong wilah Timur Tengah mengalami kelebihan dana investasi. Kondisi ini akan terjadi sepanjang minyak masih menjadi bahan bakar utama berbagai sektor transportasi dan industri di dunia. `'Pendorong utama pertumbuhan sukuk tahun ini adalah karena lonjakan harga minyak yang mendorong terjadinya overlikuiditas. Banyak dari dana itu yang diinvestasikan di instrumen investasi syariah,'' katanya.

Adrian menyebutkan, di Timur Tengah, minat untuk menjaring dana investasi melalui sukuk tetap cukup tinggi. Hal tersebut ditunjukkan penerbitan sukuk oleh beberapa perusahaan di Timur Tengah. Salah satunya adalah penerbitan sukuk senilai 875 juta dolar AS oleh Dana Gas dari Uni Emirat Arab (UEA), Oktober lalu. Selain itu, perusahaan properti RAK asal UEA dan Abyaar asal Kuwait juga telah berencana untuk menerbitkan sukuk awal tahun depan dengan nilai masing-masing dua miliar dolar AS dan 700 juta dolar AS.

Sebelumnya, berdasarkan hasil pengkajian Middle East Economic Digest (MEED), nilai transaksi keuangan syariah pada 2012 diproyeksi mencapai 30 miliar dolar AS. Jumlah tersebut mengkomposisi sekitar 30 persen dari total transaksi keuangan di wilayah Timur Tengah saat ini.

ISLAMIC BONDS (SUKUK): ITS INTRODUCTION AND APPLICATION

Recent innovations in Islamic finance have changed the dynamics of the Islamic finance industry. Specially in the area of bonds and securities the use of Sukuk or Islamic securities have become increasingly popular in the last few years, both as a means of raising government finance through sovereign issues, and as a way of companies obtaining funding through the offer of corporate sukuk. Beginning modestly in 2000 with total three sukuk worth $336 millions the total number sukuk by the end of 2006 has reached to 77 with over US$ 27 billion funds under management. By the end of 2007 the total figure is expected to exceed US$35 billion.

Sukuk has developed as one of the most significant mechanisms for raising finance in the international capital markets through Islamically acceptable structures. Multinational corporations, sovereign bodies, state corporations and financial institutions use international sukuk issuance as an alternative to syndicated financing.

What are sukuk? how are they structured? and how they are different from the conventional bond and the conventional securitization processes is discussed in this paper in some detail.

What is Sukuk

Sukuk in general may be understood as a shariah compliant ‘Bond’. In its simplest form sukuk represents ownership of an asset or its usufruct. The claim embodied in sukuk is not simply a claim to cash flow but an ownership claim. This also differentiates sukuk from conventional bonds as the latter proceed over interest bearing securities, whereas sukuk are basically investment certificates consisting of ownership claims in a pool of assets.

Sukuk (plural of word sak) were extensively used by Muslims in the Middle Ages as papers representing financial obligations originating from trade and other commercial activities. However, the present structure of sukuk are different from the sukuk originally used and are akin to the conventional concept of securitization, a process in which ownership of the underlying assets is transferred to a large number of investors through certificates representing proportionate value of the relevant assets.

Sukuk and Bond

• A bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders, on certain specified dates, interest and principal, whereas, the sukuk holders claims an undivided beneficial ownership in the underlying assets. Consequently, sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assets.
• A distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder, the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par.

Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) defines sukuk as being:

“Certificates of equal value representing after closing subscription, receipt of the value of the certificates and putting it to use as planned, common title to shares and rights in tangible assets, usufructs and services, or equity of a given project or equity of a special investment activity”.

Table: Sukuk Issuance (US$ million)

Year	2000	2001	2002	2003	2004	2005	2006
Corporate Sukuk	336.3	530	179.9	4537.06	5731.19	11358.89	24526.32
Sovereign Sukuk	0	250	800	1180	1479.35	706.5	2271.6
Total Sukuk issuance	336.3	780	979.9	5717.06	7210.54	12065.39	26797.92
Percentage Growth		131.94	25.63	483.43	26.12	67.33	122.11

Source: IFIS.

Above table shows growth in sukuk issuance from year 2000 till now. In 2000 total size of the sukuk was only US$ 336 million with no sovereign sukuk in the market. We can see from the above table that the size of total sukuk issued in 2001 was only US$ 336 million and in a short span of just six year the total size of sukuk has crossed US$ 27 billion. The growth achieved in 2003 has been most impressive at 483%. In 2006 also total growth achieved by sukuk is 122%.

Benefits and Features

• Tradable shariah-compliant capital market product providing medium to long-term fixed or variable rates of return. Assessed and rated by international rating agencies, which investors use as a guideline to assess risk/return parameters of a sukuk issue.
• 
  
• Regular periodic income streams during the investment period with easy and efficient settlement and a possibility of capital appreciation of the sukuk.
• Liquid instruments, tradable in secondary market.

Uses of Sukuk Funds

The most common uses of sukuk can be named as project specific, asset-specific, and balance sheet specific.

a. Project-specific Sukuk

Under this category money is raised through sukuk for specific project. For example, Qatar Global sukuk issued by the Government of Qatar in 2003 to mobilize resources for the construction of Hamad Medical City (HMC) in Doha. In this case a joint venture special purpose vehicle (SPV), the Qatar Global sukuk QSC, was incorporated in Qatar with limited liability. This SPV acquired the ownership of land parcel, that was registered in the name of HMC. The land parcel was placed in trust and Ijara-based Trust Certificates (TCs) were issued worth US$700 million due by October 2010. The annual floating rate of return was agreed at LIBOR plus 0.45 per cent.

b. Assets-specific Sukuk

Under this arrangement, the resources are mobilise by selling the beneficiary right of the assets to the investors. For example, the Government of Malaysia raised US$ 600 million through Ijara sukuk Trust Certificates (TCs) in 2002. Under this arrangement, the beneficiary right of the land parcels has been sold by the government of Malaysia to an SPV, which was then re-sold to investors for five years. The SPV kept the beneficiary rights of the properties in trust and issued floating rate sukuk to investors.

Another example of Asset-specific sukuk is US$250 million five-year Ijara sukuk issued to fund the extension of the airport in Bahrain. In this case the underlying asset was the airport land sold to an SPV.

c. Balance Sheet-specific Sukuk

An example of the balance sheet specific use of sukuk funds is the Islamic Development Bank (IDB) sukuk issued in August 2003. The IDB mobilised these funds to finance various projects of the member countries. The IDB made its debut resource mobilization from the international capital market by issuing US$ 400 million five-year sukuk due for maturity in 2008.

Types of Sukuk

Sukuk can be of many types depending upon the type of Islamic modes of financing and trades used in its structuring. However, the most important and common among those are ijarah, shirkah, salam and istisna. Among the fourteen eligible sukuks identified by the AAOIFI, following are more common:

1. Mudaraba Sukuk

These are investment sukuk that represent ownership of units of equal value in the Mudaraba equity and are registered in the names of holders on the basis of undivided ownership of shares in the Mudaraba equity and its returns according to the percentage of ownership of share. The owners of such sukuk are the rabbul-mal. (AAOIFI). Mudarba sukuk are used for enhancing public participation in big investment projects.

Salient Features:

Following are the salient features of mudarba sukuk:

I. Mudarba sukuk (MS) represent common ownership and entitle their holders share in the specific projects against which the MS has been issued.

II. The MS contract is based on the official notice of the issue of the prospectus which must provide all information required by shariah for the Qirad contract such as the nature of capital, the ratio for profit distribution and other conditions related to the issue, which must be compatible with shariah.

III. The MS holder is given the right to transfer the ownership by selling the deeds in the securities market at his discretion. The sale of MS must follow the rules listed below:

a. If the mudarba capital, before the operations of the project, is still in the form of money, the trading of MS would be like exchange of money for money. In that case the rules of bay al-sarf would be applied.

b. If muqarda capital is in the form of debt then it must satisfy the principles of debt trading in Islam.

c. If capital is in the form of combination of cash, receivables, goods, real assets and benefits, trade must be based on market price evolved by mutual consent.

IV. The Manager/SPV who receives the fund collected from the subscribers to MS can also invest his own fund. He will get profit for his capital contribution in addition to his share in the profit as mudarib.

V. Neither prospectus nor MS should contain a guarantee, from the issuer or the manager for the fund, for the capital or a fixed profit, or a profit based on any percentage of the capital. Accordingly;

a. The prospectus or the MS issued pursuant to it, may not stipulate payment of a specific amount to the MS holder,

b. The profit is to be divided, as determined by applying rules of shariah; that is, an amount access of the capital, and not the revenue or the yield; and

c. Profit and Loss account of the project must be published and disseminated to MS holders.

VI. It is permissible to create reserves for contingencies, such as loss of capital, by deducting from the profit.

VII. The prospectus can also contain a promise made by a third party, totally un-related to the parties to the contract, in terms of legal entity or financial status, to donate a specific sum, without any counter benefit, to meet losses in the give project, provided such commitment is independent of the mudarba contract.

On the expiry of the specified time period of the subscription, the Sukuk holders is given the right to transfer the ownership by sale or trade in the securities market at his discretion.

Steps involved in the structure:

q Mudarib enters into an agreement with project owner for construction/commissioning of project.

q SPV issues sukuk to raise funds.

q Mudarib collects regular profit payments and final capital proceeds from project activity for onward distribution to investors.

q Upon completion, Mudarib hands over the finished project to the owner.

Mudaraba Sukuk in practice

Shamil Bank of Bahrain raised 360 million Saudi Riyal investment capital through the Al Ehsa Special Realty Mudaraba, representing an investment participation in a land development transaction with a real estate development company in the Kingdom of Saudi Arabia. The investment objective of the Mudaraba is to provide investors with annual returns arising from participation in the funding of a land financing transaction Profits due to investors will be accrued on the basis of returns attained from investing the subscriptions.

2. Musharaka Sukuk

These are investment sukuk that represent ownership of Musharaka equity. It does not differ from the Mudaraba sukuk except in the organization of the relationship between the party issuing such sukuk and holders of these sukuk, whereby the party issuing sukuk forms a committee from the holders of the sukuk who can be referred to in investment decisions (AAOIFI).

Musharaka Sukuk are used for mobilizing the funds for establishing a new project or developing an existing one or financing a business activity on the basis of partnership contracts. The certificate holders become the owners of the project or the assets of the activity as per their respective shares. These Musharaka certificates can be treated as negotiable instruments and can be bought and sold in the secondary market.

“These are certificates of equal value issued with the aim of using the mobilized funds for establishing a new project, developing an existing project or financing a business activity on the basis of any partnership contracts so that the certificate holders become the owners of the project or assets of the activity as per their respective shares, with the Musharaka certificates being managed on the basis of participation or Mudaraba or an investment agency.” (AAOIFI Standard 17, 3/6)

Steps involved in the structure:

Corporate and the Special Purpose Vehicle (SPV) enter into a Musharaka Arrangement for a fixed period and an agreed profit-sharing ratio. Also the corporate undertakes to buy Musharaka shares of the SPV on a periodic basis.

q Corporate (as Musharik) contributes land or other physical assets to the Musharaka

q a & b. SPV (as Musharik) contributes cash i.e. the issue Proceeds received from the investors to the Musharaka

q The Musharaka appoints the Corporate as an agent to develop the land (or other physical assets) with the cash injected into the Musharaka and sell/lease the developed assets on behalf of the Musharaka.

q In return, the agent (i.e. the Corporate) will get a fixed agency fee plus a variable incentive fee payable.

q The profits are distributed to the sukuk holders.

q The Corporate irrevocably undertakes to buy at a pre-agreed price the Musharaka shares of the SPV on say semi-annual basis and at the end of the fixed period the SPV would no longer have any shares in the Musharaka.

Musharaka Sukuk in Practice

US$550 million sukuk transaction for Emirates airline, the seven-year deal was a structured on a Musharaka contract. The Musharaka or joint venture was set up to develop a new engineering centre and a new headquarters building on land situated near Dubai's airport which will ultimately be leased to Emirates. Profit, in the form of lease rentals, generated from the Musharaka venture will be used to pay the periodic distribution on the trust certificates.

Sitara Chemical Industries Ltd, a public limited company, made a public issue of profit-and-loss sharing based term finance certificates (TFC’s) worth Rs 360 million which were subscribed in June 2002. The TFC’s had a fixed life tenor of five years and profit and loss sharing was linked to the operating profit or loss of the Chemical Division of the company.

Kuwait Finance House (KFH), Liquidity Management Center (LMC) and Al Muthanna Investment Company (MIC), the mandated lead arrangers launched US$ 125 million Lagoon City Musharaka sukuk to support the Lagoon City residential and commercial real estate development as part of Kheiran Pearl City project.

3. Ijara Sukuk

These are sukuk that represent ownership of equal shares in a rented real estate or the usufruct of the real estate. These sukuk give their owners the right to own the real estate, receive the rent and dispose of their sukuk in a manner that does not affect the right of the lessee, i.e. they are tradable. The holders of such sukuk bear all cost of maintenance of and damage to the real estate. (AAOIFI)

Ijarah sukuk are the securities representing ownership of well defined existing and known assets tied up to a lease contract, rental of which is the return payable to sukuk holders. Payment of ijarah rentals can be unrelated to the period of taking usufruct by the lessee. It can be made before beginning of the lease period, during the period or after the period as the parties may mutually decide. This flexibility can be used to evolve different forms of contract and sukuk that may serve different purposes of issuers and the holders.

Features of Ijarah sukuk

1. It is necessary for an ijarah contract that the assets being leased and the amount of rent both are clearly known to the parties at the time of the contract and if both of these are known, ijarah can be contracted on an asset or a building that is yet to be constructed, as long as it is fully described in the contract provided that the lessor should normally be able to acquire, construct or buy the asset being leased by the time set for its delivery to the lessee (AAOIFI, 2003: 140-157). The lessor can sell the leased asset provided it does not hinder the lessee to take benefit from the asset. The new owner would be entitled to receive the rentals.

2. Rental in ijarah must be stipulated in clear terms for the firs term of lease, and for future renewable terms, it could be constant, increasing or decreasing by benchmarking or relating it to any well-known variable.

3. As per shariah rules, expenses related to the corpus or basic characteristics of the assets are the responsibility of the owner, while maintenance expenses related to its operation are to be borne by the lessee.

4. As regards procedure for issuance of ijarah sukuk, an SPV is created to purchase the asset(s) that issues sukuk to the investor, enabling it to make payment for purchasing the asset. The asset is then leased to third party for its use. The lessee makes periodic rental payments t the SPV that in turn distributes the same to the sukuk holders.

5. Ijara sukuk are completely negotiable and can be traded in the secondary markets.

6. Ijara sukuk offer a high degree of flexibility from the point of view of their issuance management and marketability. The central government, municipalities, awqaf or any other asset users, private or public can issue these Sukuk. Additionally, they can be issued by financial intermediaries or directly by users of the leased assets.

Steps involved in the structure

q The obligator sells certain assets to the SPV at an agreed pre-determined purchase price.

q The SPV raises financing by issuing sukuk certificates in an amount equal to the purchase price.

q This is passed on to the obligator (as seller).

q A lease agreement is signed between SPV and the obligator for a fixed period of time, where the obligator leases back the assets as lessee.

q SPV receives periodic rentals from the obligator;

q These are distributed among the investors i.e. the sukuk holders.

q At maturity, or on a dissolution event, the SPV sells the assets back to the seller at a predetermined value. That value should be equal to any amounts still owed under the terms of the Ijara sukuk.

Ijara Sukuk in Practice

In December 2000, Kumpulan Guthrie Berhad (Guthrie) was granted a RM1.5 billion (US$400 million) Al-Ijara Al-Muntahiyah Bit-Tamik by a consortium of banks. The original facility was raised to re-finance Guthrie’s acquisition of a palm oil plantation in the Republic of Indonesia. The consortium was then invited to participate as the underwriter/primary subscriber of the Sukuk Transaction.

US$350 million sukuk Trust Certificates by Sarawak Corporate Sukuk Inc. (SCSI) Sarawak Economic Development Corporation (SEDC) raised financing amounting to US$350 million by way of issuance of series of trust certificates issued on the principle of Ijara sukuk. The certificates were issued with a maturity of 5 years and under the proposed structure, the proceeds will be used by the issuer to purchase certain assets from 1st Silicon (Malaysia) Sdn Bhd. Thereafter, the issuer will lease assets procured from 1st Silicon to SEDC for an agreed rental price for an agreed lease period of 5 years.

4. Murabaha Sukuk

In this case the issuer of the certificate is the seller of the Murabaha commodity, the subscribers are the buyers of that commodity, and the realised funds are the purchasing cost of the commodity. The certificate holders own the Murabaha commodity and are entitled to its final sale price upon the re-sale of the Commodity. The possibility of having legally acceptable Murabaha-based sukuk is only feasible in the primary market. The negotiability of these Sukuk or their trading at the secondary market is not permitted by shariah, as the certificates represent a debt owing from the subsequent buyer of the Commodity to the certificate-holders and such trading amounts to trading in debt on a deferred basis, which will result in riba.

Despite being debt instruments, the Murabaha Sukuk could be negotiable if they are the smaller part of a package or a portfolio, the larger part of which is constituted of negotiable instruments such as Mudaraba, Musharaka, or Ijara Sukuk. Murabaha sukuk are popular in Malaysian market due to a more liberal interpretation of fiqh by Malaysian jurists permitting sale of debt (bai-al-dayn) at a negotiated price.

Steps involved in the structure:

q A master agreement is signed between the SPV and the borrower

q SPV issues sukuk to the investors and receive sukuk proceeds.

q SPV buys commodity on spot basis from the commodity supplier.

q SPV sells the commodity to the borrower at the spot price plus a profit margin, payable on installments over an agreed period of time

q The borrower sells the commodity to the Commodity buyer on spot basis.

q The investors receive the final sale price and profits.

Murabaha Sukuk in Practice

Arcapita Bank, a Bahrain-based investment firm has mandated Bayerische Hypo-und Vereinsbank AG (“HVB”), Standard Bank Plc (“SB”) and WestLB AG, London Branch (“WestLB”) (together the “Mandated Lead Arrangers”), to arrange a Five Year Multicurrency (US$, € and £) Murabaha-backed Sukuk. Sukuk will have a five-year bullet maturity and proposed pricing three month LIBOR +175bps.

5. Salam Sukuk

Salam sukuk are certificates of equal value issued for the purpose of mobilising Salam capital so that the goods to be delivered on the basis of Salam come to the ownership of the certificate holders. The issuer of the certificates is a seller of the goods of Salam, the subscribers are the buyers of the goods, while the funds realized from subscription are the purchase price (Salam capital) of the goods. The holders of Salam certificates are the owners of the Salam goods and are entitled to the sale price of the certificates or the sale price of the Salam goods sold through a parallel Salam, if any.

Salam-based securities may be created and sold by an SPV under which the funds mobilized from investors are paid as an advance to the company SPV in return for a promise to deliver a commodity at a future date. SPV can also appoint an agent to market the promised quantity at the time of delivery perhaps at a higher price. The difference between the purchase price and the sale price is the profit to the SPV and hence to the holders of the Sukuk.

All standard shariah requirements that apply to Salam also apply to Salam sukuk, such as, full payment by the buyer at the time of effecting the sale, standardized nature of underlying asset, clear enumeration of quantity, quality, date and place of delivery of the asset and the like.

One of the Shariah conditions relating to Salam, as well as for creation of Salam sukuk, is the requirement that the purchased goods are not re-sold before actual possession at maturity. Such transactions amount to selling of debt. This constraint renders the Salam instrument illiquid and hence somewhat less attractive to investors. Thus, an investor will buy a Salam certificate if he expects prices of the underlying commodity to be higher on the maturity date.

Steps involved in the transaction:

q SPV signs an undertaking with an obligator to source both commodities and buyers. The obligator contracts to buy, on behalf of the end-Sukuk holders, the commodity and then to sell it for the profit of the Sukuk holders.

q Salam certificates are issued to investors and SPV receives Sukuk proceeds.

q The Salam proceeds are passed onto the obligator who sells commodity on forward basis

q SPV receives the commodities from the obligator

q Obligator, on behalf of Sukuk holders, sells the commodities for a profit.

q Sukuk holders receive the commodity sale proceeds.

Salam Sukuk in Practice

Aluminum has been designated as the underlying asset of the Bahrain Government al Salam contract, where by it promises to sell aluminum to the buyer at a specified future date in return of a full price payment in advance. The Bahrain Islamic Bank (BIB) has been nominated to represent the other banks wishing to participate in the Al Salam contract. BIB has been delegated to sign the contracts and all other necessary documents on behalf of the other banks in the syndicate. At the same time, the buyer appoints the Government of Bahrain as an agent to market the appropriate quantity at the time of delivery through its channels of distribution. The Government of Bahrain provides an additional undertaking to the representative (BIB) to market the aluminum at a price, which will provide a return to al Salam security holders equivalent to those available through other conventional short-term money market instruments.

6. Istisna Sukuk

Istisna sukuk are certificates that carry equal value and are issued with the aim of mobilising the funds required for producing products that are owned by the certificate holders. The issuer of these certificates is the manufacturer (supplier/seller), the subscribers are the buyers of the intended product, while the funds realised from subscription are the cost of the product. The certificate holders own the product and are entitled to the sale price of the certificates or the sale price of the product sold on the basis of a parallel Istisna, if any. Istisna Sukuk are quite useful for financing large infrastructure projects. The suitability of Istisna for financial intermediation is based on the permissibility for the contractor in Istisna to enter into a parallel Istisna contract with a subcontractor. Thus, a financial institution may undertake the construction of a facility for a deferred price, and sub contract the actual construction to a specialised firm.

Shariah prohibits the sale of these debt certificates to a third party at any price other than their face value. Clearly such certificates cannot be traded in the secondary market.

Steps involved in the structure:

q SPV issues Sukuk certificates to raise funds for the project.

q Sukuk issue proceeds are used to pay the contractor/builder to build and deliver the future project.

q Title to assets is transferred to the SPV

q Property/project is leased or sold to the end buyer. The end buyer pays monthly installments to the SPV.

q The returns are distributed among the Sukuk holders.

Istisna Sukuk in Practice

Tabreed’s five-year global corporate Sukuk (on behalf of the National Central Cooling Company, UAE) provided a fixed coupon of 5.50%. It is a combination of Ijara Istisna and Ijara Mawsufah fi al dhimmah (or forward leasing contracts). The issue was launched to raise funds to retire some existing debt, which totals around US$136 million, as well as to finance expansion.

The Durrat Sukuk will finance the reclamation and infrastructure for the initial stage of a broader US$ 1 billion world class residential and leisure destination known as 'Durrat Al Bahrain', currently the Kingdom of Bahrain's largest residential development project. The return on the Sukuk is 125 basis points over 3 months LIBOR payable quarterly, with the Sukuk having an overall tenor of 5 years and an option for early redemption. The proceeds of the issue (cash) will be used by the Issuer to finance the reclamation of the land and the development of Base Infrastructure through multiple project finance (Istisna) agreements. As the works carried out under each Istisna are completed by the Contractor and delivered to the Issuer, the Issuer will give notice to the Project Company under the Master Ijara Agreement and will lease such Base Infrastructure on the basis of a lease to own transaction.

7. Hybrid Sukuk

Considering the fact that Sukuk issuance and trading are important means of investment and taking into account the various demands of investors, a more diversified Sukuk - hybrid or mixed asset Sukuk - emerged in the market. In a hybrid Sukuk, the underlying pool of assets can comprise of Istisna, Murabaha receivables as well as Ijara. Having a portfolio of assets comprising of different classes allows for a greater mobilization of funds. However, as Murabaha and Istisna contracts cannot be traded on secondary markets as securitised instruments at least 51 percent of the pool in a hybrid Sukuk must comprise of Sukuk tradable in the market such as an Ijara Sukuk. Due to the fact the Murabaha and Istisna receivables are part of the pool, the return on these certificates can only be a pre-determined fixed rate of return.

Steps involved in the structure:

q Islamic finance originator transfers tangible assets as well as Murabaha deals to the SPV.

q SPV issues certificates of participation to the Sukuk holders and receive funds. The funds are used by the Islamic finance originator.

q Islamic finance originator purchase these assets from the SPV over an agreed period of time.

q Investors receive fixed payment of return on the assets.

Hybrid Sukuk in practice

Islamic Development Bank issued the first hybrid Sukuk of assets comprising 65.8% Sukuk al-Ijara, 30.73% of Murabaha receivables and 3.4% Sukuk al-Istisna. This issuance required the IDB’s guarantee in order to secure a rating and international marketability. The $ 400 million Islamic Sukuk was issued by Solidarity Trust Services Limited (STSL), a special purpose company incorporated in Jersey Channel Islands. The Islamic Corporation for the Development of Private Sector (ICD) played an intermediary role by purchasing the asset from IDB and selling it to The Solidarity Trust Services Limited (STSL) at the consolidated net asset value.

Conclusion

The market for sukuk is now maturing and there is an increasing momentum in the wake of interest from issuers and investors. sukuk have confirmed their viability as an alternative means to mobilise medium to long-term savings and investments from a huge investor base.

Different sukuk structures have been emerging over the years but most of the sukuk issuance to date have been ijara sukuk, since they are based on the undivided pro-rata ownership of the underlying leased asset, it is freely tradable at par, premium or discount. Tradability of the sukuk in the secondary market makes them more attractive. Although less common than Ijara sukuk, other types of sukuk are also playing significant role in emerging markets to help issuers and investors alike to participate in major projects, including airports, bridges, power plants etc. The sovereign sukuk issues, following Malaysia’s lead, are enjoying widespread and positive acclaim among Islamic investors and global institutional investors alike.

FT REPORT - ISLAMIC FINANCE: Incoherent pietism and Sharia arbitrage

Published: May 23, 2007
By Mahmoud El-Gamal, Financial Times

Vying for countless billions of Arab petrodollars, unexpected champions of "Islamic finance" have emerged in unlikely places. Most recently, the growing list has included Gordon Brown, the UK's Chancellor of the Exchequer, and officers of the Monetary Authority of Singapore. Emerging financial centres in Bahrain, Dubai and Malaysia have grown with Islamic finance, but now the industry's size has piqued the interest of more traditional centres.

Most notable has been the growth of the market for bond-like instruments known as sukuk - the plural of sakk, an Arabic precursor of cheque, meaning certificate of debt. Other Arabic words have populated the world of Islamic finance: murabaha, ijara etc. Competition for this market niche has brought anglicised versions of those words into major conferences from New York to Singapore.

So, what is Islamic finance, really? As the name suggests, Islamic finance is first and foremost about religious identity. It first appears in the writings of the intellectual forefathers of political Islam and their students.

The simplistic economic view of these writers - paradoxically echoed to this day, not only by religious figures, but also by Western regulators - is that Islamic scripture forbids all types of interest. As I, and others, have shown in detail in academic publications, traditional religious scholarship does not support application of this simplistic view to modern finance. Indeed, the very practice of Islamic finance today is interest based.

If all interest is forbidden, then, in principle, the solution is to build all financial intermediation on equity-based profit sharing. The practical solution - which I call "Sharia arbitrage" - is to use legal devices to restructure interest-bearing debt, collecting interest in the form of rent or price mark-up. Designing such instruments and their certification as "interest free" constitutes the bulk of Islamic finance.

One of the most popular models is the sale/lease-back bond structure, known by the exotic name sukuk al-ijara. A bond issuer sells some real estate or other assets to a special purpose vehicle, which raises the funds by selling share certificates. The SPV leases the assets back to the issuer, thus collecting principal plus interest and passing them along to sukuk holders in the form of rent. At the end of the lease, the SPV sells or gives the property back to the issuer.

In a well-structured sukuk issuance, payments would continue to the sukuk holders, even if cash flow from the underlying assets were to stop. The repurchase agreement thus acts also to ensure that sukuk holders are exposed only to the issuer's credit risk. The role of religious-scholar consultants is to sustain the fiction of conducting a different type of finance, while keeping the associated transaction costs of that fiction minimal. Those structures have been popular only since 2000, and their risk structures have not yet been tested legally in bankruptcy or other proceedings.

A stalwart of Islamic banking, the buy/sell-back murabaha transaction, has endured two legal tests, in which British courts disregarded Sharia provisions and enforced English law.

Spurious sales and leases that rename interest as profit or rent are not without cost. Additional costs of these inefficient transactions are passed on to the customers. Fortunately for the customers, perhaps, but most fortunately for financial providers, regulators have been surprisingly accommodating, for instance eliminating double taxation on property-flipping murabaha (in which a bank buys a property, then sells it on credit immediately) for home finance in the UK.

The primary beneficiaries of Islamic finance are international law firms. Rising interest in an exotic legal system - one that appears to promote the use of sale/lease-back structures to disguise interest-bearing debt - was the greatest gift that one could give to skilled legal arbitrageurs who are experts in structured finance.

The second set of beneficiaries has been the premier multinational banks, who have driven Islamic financial innovation (re-engineering is a more apt description) in both investment and retail banking.

The third set of beneficiaries has been self-styled religious "scholars" and "experts", who are retained as consultants to certify the Islamicity of re-engineered financial products.

For now, "Islamic finance" thrives on incoherent pietism. On the one hand, its proponents justify the efficiency losses to their customers as the "cost of being Muslim". On the other hand, they rouse misplaced religious pride in the industry's growth, with surprisingly frequent claims that its modes are, or will become, unequivocally superior.

Most observers find contemporary Islamic finance harmless enough, drawing analogies to kosher water or organic tomatoes. However, it is symptomatic of more serious problems. The modus operandi of Islamic finance is worrisome for two reasons: it glorifies irrational adherence to outdated medieval jurisprudence, and supports the development of a separatist and boastful Islamic identity. This mixture has proven disastrous in recent years, and Muslims can hardly afford its economic price.

Mahmoud El-Gamal is chair of Islamic economics, finance and management at Rice University, Houston. His book Islamic Finance: Law, Economics and Practice was recently published by Cambridge University Press.

Stok Utang Luar Negeri Meningkat: Pemerintah Harus Hati-Hati Terbitkan Surat Utang Negara

Alokasi anggaran belanja negara pada APBN Perubahan Tahun 2006 perlu memperhatikan sektor-sektor yang didominasi masyarakat miskin. Penarikan jumlah utang luar negeri secara masif juga harus dihentikan agar tidak mempengaruhi kondisi fiskal nasional.

Dalam hal alokasi belanja negara, alokasi anggaran yang dibuat pemerintah pada APBN Perubahan Tahun 2006 belum menunjukkan konsep pro-poor budgeting (anggaran pengentasan kemiskinan). Sektor-sektor seperti pertanian dan kelautan yang didominasi oleh masyarakat miskin belum mendapat alokasi dana yang memadai.

"Kesejahteraan masyarakat dalam bidang pendidikan dan kesehatan alokasi anggarannya masih sangat terbatas. Ini patut menjadi perhatian pemerintah," ungkap anggota Komisi XI DPR Fraksi PKS Luthfi Hasan Ishaaq, akhir September lalu di Jakarta.

Hal yang sama juga terlihat pada alokasi anggaran yang sebenarnya berpotensi menyerap tenaga kerja baru. Alokasi belanja modal untuk industri padat karya misalnya, dinilai relatif terbatas. Padahal, dengan mengembangkan industri padat karya masalah kemiskinan sedikit terentaskan.

Luthfi juga mencermati soal pembiayaan defisit anggaran melalui utang luar negeri yang dinilai membahayakan kondisi fiskal negara. Penarikan jumlah utang luar negeri yang masif demi menutup defisit anggaran berdampak pada meningkatnya stok utang luar negeri.

"Porsi belanja modal pada APBN Perubahan tahun anggaran 2006 lebih kecil (sebesar Rp 68 triliun) dibandingkan dengan porsi pembayaran bunga utang (sebesar Rp 82 triliun)," papar dia.

Aleg PKS dari daerah pemilihan Jawa Timur itu berharap, pola pembiayaan anggaran melalui penerbitan Surat Utang Negara (SUN), baik yang diterbitkan di dalam negeri maupun di luar negeri dalam bentuk obligasi internasional selalu menerapkan prinsip kehati-hatian (prudent) setiap penerbitannya. Terlebih jika dihubungkan dengan risiko suku bunga yang selalu melekat. Apabila tidak dikelola secara hati-hati, maka sudah barang tentu sustainabilitas fiskal akan terpengaruh.

Pemerintah perlu responsif setiap adanya penambahan utang akan menyebabkan terjadinya penambahan jumlah uang primer, yang pada gilirannya akan menyebabkan terjadinya efek inflatoir yang cukup signifikan. Hal ini justru akan mementahkan target-target pembangunan yang ditetapkan sebelumnya.

Obligasi Syariah Potensial Tarik Investor Timur Tengah

Hampir bisa dipastikan, setiap tawaran investasi luar negeri yang datang selalu punya agenda politik yang merepotkan bangsa Indonesia. Padahal, investasi yang diharapkan adalah investasi yang memang murni bisnis tanpa ada titipan agenda-agenda politik, sehingga negara tetap bisa berjalan dengan agenda strategis sendiri untuk keberlangsungan pembangunan di Indonesia.

"Untuk mendatangkan investor dari Timur Tengah perlu disiapkan instrumen investasi yang comfortable, aman, dan diminati. Perlu juga menutup kemungkinan intervensi agenda politik dari pihak luar," kata anggota Komisi XI DPR, Luthfi Hasan Ishaaq di Jakarta, Senin (15/1)

Luthfi menjelaskan, instrumen investasi yang paling ampuh menarik investor Timur Tengah adalah sukuk (obligasi syariah). Menurutnya, Sukuk sangat prospektif bagi Indonesia. Investor Timur Tengah diketahui lebih suka memilih sukuk untuk menanamkan modalnya.

Indonesia termasuk yang paling lambat menangkap peluang sumber pembiayaan ini. Padahal, Dewan Syariah Nasional (DSN) sudah mengeluarkan fatwa perihal sukuk, namun hingga kini belum bisa menerbitkan SUN syariah, untuk menembus pasar dunia (sovereign sukuk). "Belum adanya landasan hukum berupa UU SUN Syariah. Ini cukup menghambat," katanya.

Hal itu, membuat investor Timur Tengah tidak merasa nyaman menanamkan modalnya di Indonesia. Padahal, pasca penarikan modal besar-besaran yang dilakukan oleh negara-negara Timur Tengah dari Amerika akibat peristiwa WTC, peluang untuk menarik dana tersebut ke Indonesia terbuka lebar.

Sebenarnya, jika bisa dikeluarkan, dalam lima tahun ke depan, Luthfi optimis sukuk bisa menggantikan posisi dana dari Consultative Group for Indonesia (CGI) untuk membiayai program-program pembangunan di Indonesia. Penerbitan berbagai Sovereign Sukuk akan berimplikasi langsung bagi pertumbuhan perekonomian, karena umumnya digunakan untuk membiayai berbagai proyek infrastruktur.

"Pemerintah perlu memprioritaskan penerbitan sukuk. Caranya, segera selesaikan RUU SUN syariah bersama DPR," tandas aleg PKS asal Jawa Timur itu.

Luthfi mengemukakan sejumlah alasan mengapa pemerintah perlu menerbitkan sukuk. Pertama, perusahaan Indonesia belum banyak dikenal di pasar global sehingga pemahaman investor akan risiko masing-masing individu sangat minim. Masuknya pemerintah dalam pasar obligasi akan mendorong investor mengetahui lebih jauh bukan saja tentang risiko investasi di Indonesia, namun juga risiko beberapa perusahaan di Indonesia.

Alasan kedua, penerbitan obligasi syariah oleh pemerintah meningkatkan comfort level investor global karena merefleksikan adanya perangkat ketentuan hukum yang pasti. Sebagian investor sampai saat ini masih menunggu adanya dasar hukum yang kuat untuk obligasi syariah. Terbitnya SUN syariah dapat dijadikan rujukan perlakuan hukum oleh (principle of legal security).

Ketiga, untuk dapat "terlihat" di pasar global, jumlah obligasi yang diterbitkan harus cukup signifikan, misalnya 1 juta dolar AS. Diakui pada level global jumlah tersebut belum dapat dikatakan besar. "Jadi patut kita sayangkan, bila pemerintah lamban. Apalagi dengan perkembangan pasar sukuk yang pesat," katanya beralasan. (Luthfi Hasan Ishaaq, MA. Anggota Komisi XI DPR-RI)