Advisor to the Prime Minister on Finance and Revenue Dr Salman Shah on Monday said the main aim behind the launching of Islamic Bond 'Sukuk' was to expand the base of investors, attracting the Islamic funds which were only invested in 'Shariah compliant' investment. Talking to PTV, the Advisor said, "Islamic Bond is Shariah Compliant. "Islamic Bond is in line with the Islamic spirit, as its profit is not based on any interest rate rather its profit would be determined by market, he added.
Elaborating the successful launch of Sukuk, Salman Shah said an Islamic instrument 'Ijara' was used to make lease type arrangement. Under that arrangement, Pakistan International Sukuk Company Limited was established which was 100 percent owned by the Government of Pakistan, he said.
Salman said Lahore-Islamabad Motorway, which was under control of the National Highway Authority, was transferred to the Sukuk Company as an asset for which it floated the Islamic Bond in the international market.
He said road shows were conducted abroad for introduction of the Sukuk in international financial markets. Initially, the investment was expected from dollars 350 million to dollars 500 but it reached dollars 1.2 billion on the order book.
During the road-shows Islamic Bonds worth dollars 600 million were distributed across the world, he said adding 47 percent distribution went to Middle East, 31 percent in Asia while 22 percent in Europe.
About the issuance of bonds, he said that was one of the best ways and powerful instruments to attract foreign investors and show economic stability and progress of any country.
Besides, it also helped to maintain and further develop relations with international investors, he added.
Islamic Bond attracted tremendous attention of the foreign investors. They were looking for Pakistan as a growing economy, he said adding that that showed the investors' confidence in economic policies of the country.
Asked would Pakistan float the Bond every fiscal year, the Advisor said Pakistan would try to introduce Bonds with 10 years' maturity inspite of 5-year maturity bond.