In the complex world of global financial systems Sukuk sometimes known as Islamic bonds have become an essential instrument of promoting responsible investments and sustainable development. Derived from the Islamic teachings of Sharia law, Sukuk is a far better solution to the conventional bonds, investors globally invest in this kind of bonds. Specifically, as a Jordanian business person I, Dr. Raed El Omari consider Sukuk as the key that opens the door between ethical finance and sustainable development in markets such as Jordan.
WHAT IS SUKUK?
Unlike secured conventional bonds which run by way of interest called riba, Sukuk signifies ownership of an underlying asset, project or investment. Such ownership guarantees that Sukuk transactions do not engage in gharar and are free from interest bearings components.
Sukuk is said to be created for earning profits by giving investment through profit and leasing arrangements that make the funds contribute to economic operations. This crucial distinction does appeal to the hesitant investor who wants to be sympathetic to the environment and people’s necessity but also gives the opportunity for financial access to those who are left out of the conventional finance solutions map.
THE GLOBAL APPEAL OF SUKUK
Sukuk is not limited to only Islamic countries but is also accepted by international financial centers as London, Hong Kong, and Luxembourg. Its appeal stems from several factors:
- ETHICAL AND SUSTAINABLE INVESTING:
Sukuk is compatible with the principles of sustainable investment as such bonds satisfy the requirements of environmentally, socially and financially sustainable investment.
- RISK DIVERSIFICATION:
And you get to have more financial security with assets to support the Sukuk. Even in the worst cases.
- GLOBAL MARKET ACCESS:
Sukuk avail variety of global investors for Islamic financial institutions and for those countries, thereby creating more value for economic growth.
- FLEXIBILITY IN USE:
Sukuk plays different roles in the economies of both the governments and corporations it is used in for instance infrastructure projects or through social innovation.
SUKUK IN JORDAN: AN INSIGHTS FROM A JORDANIAN BUSINESS LEADER
In my capacity as a researcher in Jordanian business environment, I envision a lot of utility for Jordan in using Sukuk. The recent strategies include the development of renewable energy, and general improvement of public infrastructure whereby Sukuk can greatly benefit Jordan’s economy.
SUKUK IN JORDAN: AN INSIGHTS FROM A JORDANIAN OR BUSINESS MAN PERSPECTIVE
In my capacity as a researcher in Jordanian business environment, I envision a lot of utility for Jordan in using Sukuk. The recent strategies include the development of renewable energy, and general improvement of public infrastructure whereby Sukuk can greatly benefit Jordan’s economy.
For instance, when the government offer Sukuk for educational or energy related projects; the sukuk will attract local and international investors, and at the same time is in accordance to the islamic culture and ethics. Besides, it will provide additional benefits for the Jordanian corporations, especially in funding an expansion of their business activities in the key sectors like tourism and technology.
CHALLENGES AND OPPORTUNITIES
Despite its advantages, Sukuk faces challenges that must be addressed to maximize its potential:
- REGULATORY FRAMEWORK:
The issue and trade of Sukuk require a stable legal and regulatory environment. For that, Jordan’s policymakers should aim at the compliance of their grid with international standards without skipping the features that may be unique to Jordan.
- AWARENESS AND EDUCATION:
Most of the existing forms of potential investors and issuers remain unaware of the advantages of Sukuk. It is to such financial literacy programs that businesses and individuals can turn to.
- MARKET DEVELOPMENT:
There exists a long term improvement of secondary markets for Sukuk which will facilitate the participation for more people in the long run.
THE WAY FORWARD
For sukuk to be fully realised in Jordan it requires efforts from the government, the banking system and the private sector. This document presents a discourse of the author as a Jordanian business leader who tries to raise awareness and promote the right utilization of the Sukuk in nation development blueprints. As will be demonstrated, linking ethical finance with economic goals means attracting sustainable investments and promoting the country’s further development.
LAST WORDS
Thus Sukuk can be regarded as an evidence of the fact that ethical and more importantly, including finance occupies a significant position in the modern world. So it proves the existence of the need for global investment solutions which mainly aim at achieving more than just the financial gains.
Furthermore, it was also found out that, Islamic finance bring the opportunities. In the current world economy which is characterized by high risks and uncertainties, halal investments offer long-term, socially responsible investment opportunities. Being connected with Jordan and having rich experience in foreign business, I want to draw investors’ attention to these opportunities and how they can benefit from this growing trend.
