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Legal Guide 2007 www.islamicfi nancenews.com
Sukuk in Indonesia: A Legal Review (continued..)
In 2004, Indonesia saw seven issuers
acquiring statement of effective from the
authority to issue Ijarah bond with total
issuance value of IDR 642 billion (US$68
million).
“Unlike Mudarabah
bond, Sukuk Ijarah
provides more stable
returns, even gradual
returns pursuant to the
agreement”
Conclusion
Sukuk is considered to be closer to
the parties’ sense of fairness. In Sukuk
Mudarabah, the issuer would obtain
additional funds from the investors who are
the holders of Sukuk Mudarabah, with the
obligation to make payment over sharing
from the profi t of the project funded from
Sukuk Mudarabah, and repay the fund of
bond on its maturity date.
In Sukuk Ijarah, the bondholder would
acquire more stable returns, even gradually
depending on the agreement between the
parties since the amount of Ujrah has been
determined from the beginning. Currently,
global trend indicates that investors prefer
Sukuk Ijarah due to their more stable
returns.
The Indonesian government is drafting
regulations on Ijarah bond, which are
expected to be in line with the Ijarah
Bond Opinion issued by DSN. However,
pending the enactment of such regulation,
parties may minimize any possible
dispute by making a clear agreement
that will suffi ciently protect the interest
of the contracting parties and inserting
all principles of Islamic jurisprudence,
especially on Sukuk Ijarah.
Mirza A Karim is a partner of
KarimSyah Law Firm in Jakarta,
Indonesia. He can be contacted via
email at mirza.karim@karimsyah.com
Therefore, the return to be obtained by
Sukuk Mudarabah holders is unstable
as it depends on the profi t from the
project fi nanced by the bond. If the profi t
obtained by the bond issuer is high, so
will the sharing that will be obtained by
the bondholder. If the profi t obtained is
small, so will the sharing to be obtained
by the bondholder. In anticipating a breach
of contract or negligence by the bond
issuer, the bond issuer can be requested
to provide an acknowledgment of debt and
requesting for guarantee.
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