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Sukuk Investment

Sukuk Investment. EBCC Investment Seminar 21 March 2013. Financing mechanism to bring funds for specific projects In existence for 30 years in Malaysia, the Arab Gulf, USA and Europe There is no such thing as ‘Islamic Sukuk’ but it is regulated by Shariat

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Sukuk Investment

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  1. Sukuk Investment EBCC Investment Seminar 21 March 2013

  2. Financing mechanism to bring funds for specific projects • In existence for 30 years in Malaysia, the Arab Gulf, USA and Europe • There is no such thing as ‘Islamic Sukuk’ but it is regulated by Shariat • It is not meant as finance for public deficits, subsidies or government wages • Have no fixed interest, equal value when issued and tradable. • After 5 - 12 years, the Sukuk shareholders get their principles + profit and the full ownership returns to the government. • If any loss occurs due to mismanagement by management appointed by the government, the Sukuk shareholder still gets their principles + profit. Any losses due to market volatility is at the shareholder’s own risk. • The Public Issuance of Sukuk determines the percentage Egyptian/non- Egyptian shareholders in a project, i.e. • 90 percent Egyptian Sukuk holders • 10 percent foreign Sukuk holders Definition of Sukuk

  3. Sukuk vs. Conventional Bonds

  4. Reminiscent of the Tawzif Al Amwal experience of 1981-1988 under law shareholding companies law 109, 1981. • The law does not specify percentage foreign vs. local shareholders. Variable depending on project. • Sukuk aims to bring $200bn to the Egyptian market, the entire Sukuk world market $86bn. • Shariat Supervisory Committee is appointed by the PM, not the Azhar. • Promotion & marketing companies appointed by direct orders, not via tenders. • Sukuk is not subject to capital gains tax, which is against private initiative. • Not enough protection in the Sukuk law shareholders for the holders Arguments against Sukuk

  5. Projects Ready for Sukuk • Power Stations • Petroleum Refineries • Steel Mills • Automobile Production Lines Potential Projects for Sukuk

  6. Thank You

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