Malaysia launches first digital sukuk for economic recovery

The Malaysian government launched the country's first digital sukuk, called sukuk prihatin, under the National Economic recovery Plan (Penjana).

The sukuk offering is a Shariah-compliant instrument based on the principle of tawarruq via the commodity murabaha arrangement. The sukuk can be fully subscribed or invested through the digital banking platforms of 27 participating banks in Malaysia, utilizing JomPay and DuitNow facilities. Maybank is the main distribution bank for the sukuk.

The launch was witnessed by the Yang di-Pertuan Agong (King) Al-Sultan Abdullah Ri'ayatuddin Al-Mustafa Billah Shah, Prime Minister Muhyiddin Yassin and Finance Minister Zafrul Abdul Aziz.

The government aims to raise up to 500 million ringgit (US$120 million) through the offering, which pays a profit rate of 2% per annum for two years. The profit rate will be credited quarterly into the investor's account. Within two years, investors have the option to donate the subscription amount, which will enable them to enjoy a tax deduction.

Sukuk prihatin are non-tradable, non-transferable and non-assignable. The offering is targeted at Malaysians who are at least 18 years old. The minimum amount for the initial investment is 500 ringgit. The offer period is from August 18 to September 17 2020.

Proceeds from the offering will be channeled to the Kumpulan Wang Covid-19 for the implementation of economic recovery measures that include, among others, enhancing connectivity to rural schools, supporting research grants for infectious diseases and financing micro enterprises, particularly those run by women entrepreneurs.