Sukuk Murabahah under Malaysian Plural Legal System

Abstract

Murabahah Sukuk is one of the prevalent type of sukuk issuances in Malaysia. An IIFM 5th report shows that the issuance of murabahah sukuk as at end of June 2015 is only at 48%. Despite the huge issuance numbers of these sukuk in 2013 that reach up to 75%, the issuance based on this structure of contract has decreased. The reduction is due to several issues such as different ruling inherent from the 'inter-madhabic conflict', the issue of conflict of laws and substance over the form issue. For the purpose of this paper, the issue of differences between AAOIFI ruling and Malaysian ruling inherent from inter-madhabic conflict will be highlighted with regards to the issue of bay' dayn. Under the Malaysian regulations, the structuring, issuance, and investment in murabahah sukuk must comply with the applicable shari'ah principles' and Malaysian laws. This qualitative legal study was carried out to critically examine and analyse the legal and the shari'ah implications in the issuance, structuring, and investment of murabahah sukuk. The findings of this study are aimed at recommending methods to deal with the issues of legal pluralism in the issuance, structuring, and investment of murabahah sukuk specifically focusing on Malaysia jurisdiction. The suggested approach is the pluralist approach through codification of shari'ah law, standardisation, recognition, and validation.