Question

From Islamic Finance prospective, Explain and write SWOT on Ijarah Sukuk

Answer 1

Ijarah Sukuk are securities in which the owner owns, in a joint manner, some part of the assets whose profits have been transferred to either the consumer or the originator as per the provisions of the Ijara contract.

SWOT analysis of Ijarah Sukuk:

Strengths – It can be traded easily in the secondary markets and its price is determined by market agents.

Weakness – Not every potential issuer has got access to the needed underlying asset. It also carries high transaction costs in the form of maintenance and insurance costs.

Opportunities – As Ijarah Sukuk is completely negotiable and offers a high degree of flexibility its marketability can be expanded in several countries in which Islamism is not the main religion.

Threats – It faces threats from other forms of securities in which the expected return can be fixed and determined at the beginning of the contract.