Islamists To Meet With Saleh To Discuss Sukuk Law

Members of prominent Islamist parties are set to meet with Minister of Investment Ossama Saleh next Monday to discuss the possibility of introducing Islamic debt guidelines.

“This meeting is mainly to coordinate between political parties and the government to come up with a coherent legal framework in order to issue sukuk [Islamic bonds] in Egypt,” said Ahmed Al-Najjar, a member of the economic committee of the Freedom and Justice Party (FJP).

The Ministry of Finance is preparing an international conference to be held by the beginning of next month to announce the main features of the projected sukuk law, Al-Borsa News reported Thursday.

The demand for sukuk is flourishing, according to Al-Najjar. He noted that there are several tenders for sukuk from several international banks such as Deutsche Bank and other major Islamic banks in the Gulf.

Last June, Egypt’s Financial Supervisory Authority (EFSA) approved in principal a proposal to amend Capital Market Law No. 95 of 1992 to pave the way for the issuance of Islamic bonds, AhramOnline reported.

However, the absence of legislative authority created a legal predicament which hobbled discussions over the sukuk law. The head of the economic committee of Al-Nour Party, TarekShaalan, said “as a result of dissolving the parliament, Islamist parties resumed their discussions outside the parliament premise, and worked together through workshops in order to forge a common vision of the sukuk law, and then discuss it with government representatives.”

“It does not make sense to wait six months until a new parliament is elected to have a legal framework for issuing sukuk,” Al-Najjar stated.

Instead of introducing a new law, Al-Najjar said the FJP will either propose to amend the executive regulations of the capital market law or introduce minor amendments to the law itself, in order to overcome the legislative predicament and avoid losses that may be incurred as a result of the delay in issuing the sukuk law.

The idea of introducing sukuk into the Egyptian market has been mooted by FJP, the political arm of the Muslim Brotherhood, which won the majority of seats in the last dissolved parliament.

Ashraf Badr El-Din, the Muslim Brotherhood member who wrote the economic plan for the FJP, argued there is a high percentage of Egyptians who have reservations over interest rates attached to conventional debt notes, and introducing sukuk would encourage them to inject their money into the market, according to IkhwanOnline.

The objectiveof introducing shari’a-compliant fiscal tools is to attract investors from the Persian Gulf and Southeast Asia, who worry about interest rates attached to conventional financial tools.

The Egyptian government adopted the idea of issuing sukuk, as it is believed that it will have a positive impact on the economy and boost infrastructure development investments. Upon his visit to the Egyptian Stock Exchange on 3 September, Prime Minister Hisham Qandil asserted the importance of introducing sukuk into the Egyptian market, as a part of the government’s plan to provide a wide range of services targeting potential investors from different backgrounds and uplift Egypt’s ailing economy.

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