Global Sukuk Map 2013 (click for larger size)
By Ray Chickrie
Caribbean News Now contributor
PARAMARIBO, Suriname -- Jim Rasam, CEO of Intermed Group, has launched a new form of investment for Suriname -- “Sukuk” -- which replaces interest bearing bank loans for joint-venture capital. This form of financing allows Muslims and others to keep their capital and fulfill their Islamic obligations, according to Rasam, who spoke to Star Niews of Suriname on Sunday during the official launch of Sukuk in Paramaribo.
Rasam launched Suriname Sukuk intentionally during Ramadan when, according to him, during the “fasting month everything should be cleansed, both physically and mentally and be in a state of spirituality.”
"This is a great opportunity also for clean capital," says Rasam.
Fixed income interest bearing bonds are not permissible in Islam, hence Sukuk are securities that comply with the Islamic law and its investment principles, which prohibit the charging, or paying of interest. Financial assets that comply with Islamic law can be classified in accordance with their tradability and non-tradability in the secondary markets.
Sukuk is an ancient Islamic form of investment, where there is a profit sharing rather than interest rates, according to the rules of Islamic principles (Shariah) and is halal (permissible). It is based on the Islamic principle of commerce and trade that forbids collecting interest, which is referenced in the Quran in Surah Al Baqarah, verse 275, according to Rasam.
Sukuk dates back to the year 685 during reign of Caliph Marwan I, the fourth Caliph of the Umayyad Dynasty of what is now Syria. Sukuk is the plural of the Arabic word sakk, which means a deed, certificate or contract setting out arrangements regarding monies paid and transfer of rights. The word 'check' is derived from sakk.
Rasam said that Sukuk financing started in Suriname in 2012, when Intermed became the Caribbean distributor of BBaun, a German manufacturer of medical products and equipment. Intermed invested in three Sukuk Murabaha with a total value of 65,000 Euros, which included a non-Muslim couple. The couple earned so well that they returned for a second investment after two years according to Rasam.
Islamic finance will drive the growth of Intermed group in the future, according to Rasam, who said that Islamic finance is a safe response to the financial and economic crises that affected Western countries. Since the global economic crisis, Islamic banking and finance has become more popular.
According to the Amana Bank of Sri Lanka, Sukuk market is one of the fastest growing segments of the Islamic capital market (“direct funding market”). It provides alternative funding avenue for corporate entities and governments, besides bank funding. Sukuk also allows larger funding amounts, and provides liquidity to investors, as they can trade it in the secondary market.
Islamic finance and banking has expanded tremendously since the late 1990s.
In England, a strong Islamic finance sector has emerged, partly through active support of the British government. And Malaysia is one of the global leaders of Islamic finance, the world’s largest sukuk issuer, the second largest Islamic insurance – Takaful -- market and the third largest Islamic banking market.
With a Muslim minority of about 20% of its population, Suriname is a member of the Islamic Development Bank (IsDB) and the Organisation of Islamic Cooperation (OIC).