Reference no: EM132831896

The Government of Malaysia has launched the Malaysia's first digital sukuk, the RM500 million Sukuk Prihatin on 18 August 2020. Sukuk Prihatin was issued in response to the demand from various stakeholders to help the government rebuild the economy in the post-COVID-19 pandemic era.

The issuance of Sukuk Prihatin provides the opportunities for the public and the corporate sector to subscribe to a minimum investment of RM500, with no maximum limit to its subscription. Sukuk Prihatin, which is a Shariah-compliant investment instrument based on the principle of Tawarruq via Commodity Murabahah arrangement, utilizing the Shariah-compliant commodities as the underlying assets. It offers a profit rate of two percent per annum, for two years. The subscription period starts on 18 August 2020 until 17 September 2020 and the profit will be paid every quarter of the year. The Government has provided the tax exemption for the subscription of Sukuk Prihatin. Maybank is the main distribution bank for Sukuk Prihatin and it can be subscribed only through digital banking services, using JomPAY and DuitNow facilities.

The subscription from Sukuk Prihatin will be channeled into the Covid-19 Consolidated Fund and programmed to be funded by sukuk were for the benefit of those affected by the pandemic. The programmes included improving connectivity for rural schools, funding grants for research into infectious diseases, and financing micro-small and medium enterprises, especially women entrepreneurs. The Government would also allocate some of the proceeds from Sukuk Prihatin for health, including research on infectious diseases. The Sukuk Prihatin initiative aims to meet the three focus of the Shared Prosperity Vision and is part of an approach that would benefit the most target group that is worst affected by Covid-19.

Source: https://www.pmo.gov.my/2020/08/rm500-million-sukuk-prihatin-launched/

QUESTIONS

1. Outline the transaction summary for the above Sukuk issuance.

2. Discuss three (3) points to reflect your understanding about Sukuk Murabahah.

3. What key advice would you give, if you had to discuss with the Prime Minister in five (5) points on the ability, benefits, factors and/or suggestions that could contribute to the success of Sukuk Prihatin in achieving its objectives?