Role of Şukuk al-Istisnā’ In Islamic Capital for Developing Economy of A Country and Providing Fund For A Project

Abstract

In the contemporary era Şukuk al-Istisnā’ becomes one of the most important element of Islamic capital market instruments. It plays a crucial role in development of a country. Thus, in a Şukuk al-Istisnā’ transaction the companies can issue Şukuk on a manufactured asset suc a s a building, highway, bridge, university that will be constructed for future purposes, and Şukuk holders can sell their Şukuk in the secondary market at any mutually agreed price. In addition, they can also issue Şukuk on manufactured assets such as air craft that will be manufactured by foreign companies, and the issuer can conclude a parallel Istisna’ contract with another company to make similar assets and deliver it to the Şukuk holders. This paper examines legality of Istisna’ contract, similarities and dissimilarities between Istisna’ contract and Salam as well as Ijarah. It also analyses the nature and the essential features of Şukuk al-Istisnā’. The paper highlights the role of Şukuk al-Istisnā’ and its process. The methodology used in this paper is qualitative in which Islamic jurisprudential method which is based on the view of prominent Muslim scholars. It was found in the study that, Istisna contract in general is a vital contract which can contribute significant role in development of economy of a country. It is argued in the paper that Şukuk al-Istisnā’is crucial element of financing a project which will be carried out in the future as the issuer of Şukuk al-Istisnā’ can conclude a parallel Istisna’ contract on an asset which will be manufactured in the future.