Reference no: EM132831787
REVIEW ON GENERAL FRAMEWORK FOR SUKUK ISSUANCE
Mauritius is a developing economy, strategically located in the Indian Ocean, midway between the continents of Asia, Africa and Australia. As an island-economy, it has a small population of 1.3 million inhabitants; 18% are Muslims but they account for more than 25% of the island's personal wealth. The Government of Mauritius is continuously improving its infrastructural services for the people and accordingly has a list of development projects in its budget plan to be carried out over the years.
Mauritius has also successfully crafted the prerequisites to establish itself as an attractive, safe and business-friendly location for both local and foreign investors. Among its competitive advantages as an international business centre are: political, economic and social stability; a pro-business environment with the government acting as a facilitator; sound economic management; a qualified and professional workforce; good governance in investment promotion with more predictable government laws, regulations and procedures; and modern infrastructure and reliable support services including banking and finance, airport and port logistics, and telecommunications.
In its pursuit to promote Mauritius as a financial services platform in the region, the government has shown firm commitment and support towards the development of Islamic financial services in the country to diversify its product offerings and provide an alternative financing solution to the financially strong Muslim community. It has accordingly adjusted regulations and taxes to make the offering of Islamic financial services attractive to the banks and financial institutions.
Due to the island's location, the government also wishes to explore regional opportunities to establish Mauritius as an offshore Islamic financial centre with inroads to Africa and the East. However, despite the positive steps taken to boost the development of Islamic financial services, progress is still slow with none of the 20 conventional banks operating in the country showing interest to develop such services. To encourage market players to offer these services, the market needs short-term money market instruments, long-term stable return instruments with low risk, and banking assets.
QUESTIONS
1. Based on the scenario above, what are the expected benefits that will influence the Government of Mauritus to consider issuance of a sovereign sukuk which will then play a role in kick-starting the development of the Islamic finance industry in Mauritius?