THE CASE FOR RECEIVABLES-BASED ṢUKŪK: CONVERGENCE BETWEEN THE MALAYSIAN AND GLOBAL SHARĪʿAH STANDARDS ON BAYʿ AL-DAYN?

The ṣukūk market has been an innovative market, with ṣukūk structures evolving from “asset-backed” to “asset-based” and from “blended-assets” to “asset-light” structures. New ṣukūk structures were introduced mainly to solve the key problem faced by issuers who lack suitable Sharīʿah-compliant physical assets to support their ṣukūk issuance. This paper focuses on the “blended-assets” ṣukūk known as ṣukūk al-wakālah, a type that blends different types of physical assets and receivables. Whilst the Malaysian fuqaha (jurists) have allowed the sale of ṣukūk having 100% receivables, the fuqaha from the rest of the world have only permitted the sale of ṣukūk having substantial physical assets. This paper therefore discusses the fiqhī (juristic) analysis behind the requirement of having a minimum threshold (either 51%, 33% or 30%) of physical assets for ṣukūk issuance and trading purposes. The paper poses the question of whether the threshold of physical assets can be further reduced to 10%. In particular, it examines the issue of whether trading of a ṣukūk representing 90% receivables and 10% physical assets is permissible under the Sharīʿah.