Kuwait calls for regulation of sukuk

by Dylan Bowman Monday, 21 May 2007

A framework to regulate the issuance of Islamic bonds in Kuwait needs to be put in place, the governor of the country’s central bank said yesterday.

Currently Shariah-compliant financial institutions in Kuwait are not allowed to issue Islamic bonds, or 'sukuk', to finance their activities, despite non-Shariah banks being permitted to issue conventional bonds.
Responding to questions as to why this was the case, governor Sheikh Salem Abdulaziz Al-Sabah said it was because no legal system had yet been established to regulate sukuk, the Kuwait news agency KUNA reported.

Al-Sabah said the Central Bank of Kuwait (CBK) was “keen to provide a legal system to regulate their [sukuk] issuance, especially in light of growing demand”.

The governor said sukuk was a major investment tool and a means to provide resources for companies, and that he was hopeful the problem could be resolved.

“We are optimistic that a solution will be found soon whereby related institutions will be able to issue [sukuk],” he stated.

Al-Sabah said CBK was working on the issue and had notified the Kuwait Ministry of Commerce and Industry about the need to amend the law concerning the dealing in shares and setting up investment funds.



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