Apa Tu Sukuk?

You may be asking what is the different between the Bon Simpanan Merdeka that Bank Negara launch earlier March and this Sukuk Simpanan Rakyat.

To make it simple, we usually just say that the features of these 2 bonds are different. One is for senior citizens, 1 is for people that is over 21 years of age. One is monthly interest payout, another is quarterly interest payout and etc.... 

Well it's time to dig in deeper on this question. What is Sukuk anyway. Sukuk is the Arabic name for a financial certificate but can be seen as an Islamic equivalent of bond. If that so, then what is a bond? A bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a later date, termed maturity. It is a formal contract to repay borrowed money with interest at fixed intervals.

Thus a bond is like a loan: the issuer is the borrower, the bond holder is the lender, and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to spur the current economy slowdown. 

But however in fixed income, interest bearing bonds are not permissible in Islam, hence Sukuk are securities that comply with the Islamic law and its investment principles, which prohibits the charging, or paying of interest. They will use the term Profit Sharing. 

This is just a very shallow explaination of Sukuk as it can go into very technical and deep. So if really wanna know more about sukuk, you can search it at http://www.learnislamicfinance.com/Free-Study-Notes.htm

Chiao