P015 DIGITAL TRANSFORMATION OF ISLAMIC DEBT MARKETS: A NARRATIVE REVIEW OF TOKENISED SUKUK IN MALAYSIA

Abstract

Malaysia is heading towards a major digital revolution with the implementation of tokenised sukuk, often known as smart sukuk. The country is a key player in the global Islamic capital market. Blockchain technology has the potential to significantly reduce costs of issuance and provide access to markets for retail investors and Micro, Small and Medium Enterprises (MSMEs). However, integration of modern technologies into Islamic finance confronts major challenges due to complex theological, legal and structural problems. The study uses thematic analysis to explain a narrative appraisal of trends, difficulties, strategies and possible research paths of tokenised sukuk in Malaysia. The findings demonstrate that government-funded pilot initiatives exhibit institutional preparedness. Smart contract programming has an irreversible quality that conflicts with the adaptability needed by Islamic jurisprudence. Furthermore, Malaysia’s dual legal system, the lack of common ESG definitions, and inadequate cross-border enforcement continue to prevent market integration. This paper suggests combining automated execution on the blockchain with human Shariah oversight off-chain using “hybrid smart contracts” and Regulatory Technology (RegTech). The research suggests that the research should move from qualitative analysis to quantitative economic models such as Autoregressive Distributed Lag (ARDL) and Value-at-Risk (VaR) to examine the real economic impact and default risk of digital Islamic assets. This is an evident gap in the current field of study.