Sukuk, often referred to as Islamic bonds, are financial certificates that comply with Shariah principles, representing ownership in tangible assets, usufruct, services, or equity of an identified project. The global sukuk market has experienced significant growth, with Malaysia contributing 46% of global sukuk issuances in 2022, underscoring its pivotal role in the market. This white paper explores how Malaysia can emerge as a global leader in sukuk tokenization, leveraging its well-established Islamic finance infrastructure, robust regulatory framework, and continuous innovation in sukuk structures.

Specifically, the whitepaper suggests several strategic research issues to be resolved before the nation can realise its potential to lead in sukuk tokenization. These include regulatory clarity and compliance, addressing smart contract vulnerabilities, testing efficiencies in token issuances and transfers, and ensuring investor security. By addressing these strategic issues, Malaysia can enhance its position as a global hub for sukuk issuance and drive the growth and development of the Islamic finance sector. This will not only contribute to the country’s economic growth but also promote the adoption of ethical and transparent financial practices globally.

The whitepaper was authored by Dr. Ziyaad Mahomed, Associate Professor at INCEIF University and SC-OCIS Visiting Fellow to Oxford, UK.

Click below to download the full whitepaper.