Social Impact Sukūk: Implications from the Notion of Maslaha

Abstract

The idea of developing Social Impact Sukūk (SIS) was to create an alternative investment opportunity to those are interested in investing in the community developments. Islamic investment funds are available in the global financial market for investors wish to generate income in line with the notion of Maslaha to examine whether or not it better serves the interest of the Muslim community at large who seek the strict adherence to the underlying principles of Sharī’ah since Islamic finance is inseparably connected with the Sharī’ah. However, this has not been addressed earlier as far the as researchers are aware, and thus the purpose of this chapter is to fill this research gap. Moreover, extensive initiatives have not been made so far on social finance in the Islamic capital market (ICM) as was expected. We seek to argue that the notion of Maslaha must be applied into ensuring the compliance of Sharī’ah in the structure of SIS in order to serves the best interest of the community from the premise that the theory and practice of fiqhus-Sukūk or an understanding of Sukūk necessitates to fulfil the objectives of the underlying principles of Maslaha and devise criteria on which Sukūk can serve the maximum interest of their stakeholders. The Maslaha is applied to measure this in order to explore that SIS are enthusiastically designed to cater for social finance dimension and offer to investors who have some tolerance with a lower return. The methodology chosen for this chapter is essentially a literature review, and as such the relevant literatures are reviewed to critically argue the opportunities and challenges of adopting SIS in ICM. Brunei Darussalam has been chosen as a case study due to the fact that the country has the potential to compete in the fastest-growing services in the global financial market: Islamic finance.