PUTRAJAYA: The planned RM500 million Sukuk Prihatin is for Malaysians who want to help their fellow citizens ride through the Covid-19 crisis, without expecting any returns from subscribing to the war bond-like issuance.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said Sukuk Prihatin would literally offer no returns to its holders.
"We know a lot of Malaysians want to help rebuild the economy. In fact, RM170 million in donation has been given to the government in the form of cash and kind to date to help the government tackle Covid-19.
"There are a lot more people asking how they can also help. With the issuance of this sukuk, the rate of return is going to be much lower than Malaysian Government Securities (MGS). So you cannot get much returns from it," Tengku Zafrul told the New Straits Times and Berita Harian in an interview on Monday.
He said there would be an option for people to not get any returns at all from their Sukuk Prihatin investment. In other words, they can give up the investment as a donation.
"This sukuk is not a way for people to make money. It is intended to help the ones who are affected by the Covid-19 pandemic."
Sukuk Prihatin was first announced by Prime Minister Tan Sri Muhyiddin Yassin when presenting the RM35 billion Penjana economic recovery plan on Friday.
Muhyiddin said it would be issued in the third quarter of the year with a fund size of RM500 million.
Tengku Zafrul said the sukuk would be offered to the public, individuals and corporations, adding that the government had yet to decide on the minimum investment and tenure, among others.
He said the proceeds would be channelled through the next stimulus programme, which will be announced soon.
Industry insiders said the Prihatin sukuk was akin to "war bonds" with zero interest and at a discount of its face value, issued by some countries.
Malaysia could be the first in Asia to issue such a bond in years, they added.
A war bond was originally an initiative by governments to fund military operations and spending by issuing debt for the public to buy. The public may buy these bonds out of a feeling of patriotic duty, or other emotional appeal.
Although war bonds do not typically pay interest, they are sold at a discount that mature to face value, typically after a period of 10 to 30 years.
Countries that have reportedly issued similar instruments include the United States, Canada, Germany and the United Kingdom.
According to Investopedia, war bonds were initially known as Defence Bonds. They were first issued as Liberty Bonds in 1917 to finance the US government's participation in World War I.
Through the sale of the bonds, the US government raised US$21.5 billion for its war efforts.