As a part of the government’s desire to boost the Islamic finance industry in Turkey, Sukuk issuance has become an important topic for the Turkish economy. The government is planning to accelerate the growth of the Turkish economy by implementing Sukuk as one of the main instruments for development.
In this regard Mehmet Simsek, the minister of finance, and Ali Babacan, the deputy prime minister, have made several statements emphasizing the importance of Sukuk issuance. Mehmet has stated that the private sector has already issued Sukuk and is working on further Sukuk projects. He has also stated that Turkey is willing to become a part of the Sukuk sector by issuing a sovereign Sukuk which will significantly encourage banks and financial institutions to continue and increase their investments in Islamic finance.
Ali has stated that government projects such as Galataport, Haydarpasaport and other similar major projects will be financed by Sukuk with the cooperation of the government and the private sector. It is also expected to finance the third Bosphorus bridge project by issuing lease certificates (Sukuk ljarah).
Role of Sukuk
The World Bank, the Capital Markets Board of Turkey and the Turkish participation bank Albaraka Türk jointly organized and hosted a conference on the 18th May 2012 in Istanbul. Many leading individuals and corporations attended the conference, where the role of Sukuk in the development of the Islamic finance industry was discussed.
The conference enlightened Turkey’s future concerning Islamic finance; particularly on Sukuk issuances by the Turkish government and private sector companies.
Ayhan Keser, the assistant general manager of Albaraka Türk, mentioned the importance of local players in the Sukuk market. He stated that only two Sukuk issuances have been realized in Turkey by Küveyt Türk Katilim Bankasi. However these Sukuk issuances were made in US dollars and were only targeting foreign investors. He underlined that the Sukuk issuers in future should also focus on the domestic market and should consider issuances in the Turkish lira.
Albaraka Türk is planning to issue lease certificates in the second half of 2012 provided that the market conditions are positive. This issuance will make Albaraka Türk the second Sukuk issuer in Turkey.
In the closing remarks of the conference Cavit Dagdas, the deputy undersecretary of the treasury, stated that the government is very positive about Sukuk and has already started to work on a draft law which is now being discussed in the parliament commissions. He mentioned that the draft law may be enacted by late June and the first sovereign Sukuk issuance may be realized in the second half of 2012.
Ali Ceylan is a partner at Baspinar & Partners Law Firm. He can be contacted at
[email protected]
.