INTRODUCTION & ASSET-BACKED, ASSET BASED

    As a vital part of the Islamic financial system (IFS), Islamic Capital Market is one of the transaction where Shariah-compliant financial asset are traded. This approach mimics the traditional market while encouraging and facilitating investors' search for Shariah-compliant investment possibilities. Islamic Capital Market, also known as a marketplace to the traditional capital market, is defined as the understanding of applying Shariah injunctions and rules to prevent injustice in the acquisition and disposition of material resources in order to provide individual satisfaction and enable them to fulfil their obligations to Allah and society. Islamic capital market (ICM) transactions are conducted in a manner that is consistent with Muslim conscience and Islam's religion.

     Basically, Sukuk and Islamic equities made up the bulk of the commodities traded in the ICM. In Malaysia, the Islamic capital market (ICM) offered Islamic stocks and Sukuk indices that gave a profit as a return on investment and replaced interest-bearing securities. Islamic equities and Sukuk provide protection against risk and insecurity, particularly during times of crisis. The Malaysian stock exchange has a higher market capitalization than the traditional stock exchange. Islamic capital markets are used by businesses and governments to raise financing for new projects or to expand existing ones. For example, to raise funds for public projects, a corporation may go public, and a government may issue Shari'ah compliant securities called Sukuk.

    There are two feature of Shariah requirement that related to the sukuk origination which is Asset-backed sukuk and also asset-based sukuk. In asset-backed arrangement, the originator sold the underlying assets to a special purpose vehicle (SPV) that retains them and issues the sukuk backed by them. In the case of default and liquidation, a genuine sale means that the issuer's assets will not be added to the originator's assets. As a result, asset-backed sukuk are closer to equity than debt, and as a result, they are less popular in the sukuk market. Governments in Western Europe, for example, have lent their backing to the growth of public-private partnership (PPP) arrangements.

    While asset-based make the issuer purchases the underlying assets and then invests, trades, or leases them on behalf of the investors (sukuk holders), using the monies obtained through the issued certificates (sukuk). In this form, the originator normally merely transfers the beneficial ownership of the SPV issuer to the investors. However, shari'a requires that assets be transferred to sukuk holders.  But its slidely different from conventional capital market that referred to as social science that investigates how individuals, governments, businesses, and nations allocate scarce resources to meet their limitless desires. It is based on human ideas, research, ideologies, and applications. Humans are the owners of wealth, and they get it through finding, extracting, inheriting, or working for it. If scarcity of resources is the primary economic issue.