Comparative study of legal and regulatory framework of sukuk issuance in Saudi Arabia, Malaysia and the United Arab Emirates

Saudi government planners have recognized, as is shown by the CMA Strategic Plan "Financial Leadership Program" (2019-2021), that the sukuk market in Saudi Arabia is relatively small when compared to emerging markets; they represent a small percentage of bank financing and GDP. The development of this market requires concerted efforts and cooperation between various parties to enhance its attractiveness to exporters and investors. The main aim of this present study is to provide suggestions for the development of the current framework of Sukuk regulation and laws in Saudi Arabia, compare it with Sukuk issuance in Malaysia and the United Arab Emirates, and examine the conclusions that follow from this comparison for the Sukuk issuance in Saudi Arabia. This study employed a qualitative research design where the inquiry is aimed at building a holistic description of the area of study. The study used the comparative approach to analyse Sukuk regulations in Saudi Arabia, Malaysia, and the United Arab Emirates. The weaknesses and strengths can be easily calculated and determined. Moreover, semi-structured interviews were conducted with important individuals from entities that issue Sukuk from Malaysia, the United Arab Emirates and Saudi Arabia and they are included in the study. The insights of issuers of sukuk were discovered in the present study, strong points of legal and regulatory framework of Sukuk in the United Arab Emirates and Malaysia and the weak points of legal and regulatory framework of sukuk in Saudi Arabia. Research findings show that Sukuk does not have specific laws and regulations and is treated in Saudi Arabia under the same regulations as capital markets and their tools. Moreover, there is no independent central Sharia board in Saudi Arabia to regulate and oversee Sukuk. The regulations of Sukuk needs to be properly modified to provide a clear understanding of Sukuk in Saudi Arabia take a usefull example from the Malaysian and the United Arab Emirates experience to help to enhance the legal and regulatory structure of Sukuk in Saudi Arabia.

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