{"id":1306,"date":"2018-01-10T03:50:05","date_gmt":"2018-01-10T03:50:05","guid":{"rendered":"https:\/\/blog.ethis.co\/?p=1306"},"modified":"2022-11-15T08:29:15","modified_gmt":"2022-11-15T08:29:15","slug":"sukuk-taking-indonesia-storm","status":"publish","type":"post","link":"https:\/\/ethis.co\/blog\/sukuk-taking-indonesia-storm\/","title":{"rendered":"Sukuk: Taking Indonesia by Storm"},"content":{"rendered":"<p>&nbsp;<\/p>\n<p style=\"text-align: center;\"><b>Sukuk: Taking Indonesia by Storm<\/b><\/p>\n<p><b>Indonesia: A Brief Snapshot<\/b><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">In the search for new <a href=\"https:\/\/ethis.co\/blog\/islamic-finance-explained\/\" target=\"_blank\" rel=\"noopener noreferrer\">Islamic finance<\/a> markets and prospects, Indonesia remains a region with relatively untapped potential. The country has a population estimated at <a href=\"http:\/\/www.worldometers.info\" target=\"_blank\" rel=\"noopener noreferrer\">266.79 million<\/a>, and an important source of several essential commodities.&nbsp;Looking ahead, <a href=\"https:\/\/www.mckinsey.com\/global-themes\/asia-pacific\/the-archipelago-economy\" target=\"_blank\" rel=\"noopener noreferrer\">Indonesia is expected to be the 7th<\/a><\/span><span style=\"font-weight: 400;\">&nbsp;largest economy in the world by 2030, where the country\u2019s economic growth will be supported by the increasing ties to the global economy, through both trade and financial channels.&nbsp;<\/span>While structural demographic and economic prospects for Indonesia are bright, several key enablers need to be in place to support continued sustainable growth. Currently, one of the most notable issues for Indonesia is the need for infrastructure, in particular transportation, electricity, energy (oil and gas), information, technology, telecommunication, public basic facilities etc. This has become one of the priority sectors in the national development.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_51_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\" role=\"button\"><label for=\"item-69e96c4b334f2\" ><span class=\"\"><span style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input aria-label=\"Toggle\" aria-label=\"item-69e96c4b334f2\"  type=\"checkbox\" id=\"item-69e96c4b334f2\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/ethis.co\/blog\/sukuk-taking-indonesia-storm\/#Infrastructure_Issues_in_Indonesia\" title=\"Infrastructure Issues in Indonesia:\">Infrastructure Issues in Indonesia:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/ethis.co\/blog\/sukuk-taking-indonesia-storm\/#Infrastructure_Budget_Indonesia\" title=\"Infrastructure Budget Indonesia:\">Infrastructure Budget Indonesia:<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/ethis.co\/blog\/sukuk-taking-indonesia-storm\/#Indonesia_Sukuk_A_Success_Story\" title=\"Indonesia Sukuk: A Success Story\">Indonesia Sukuk: A Success Story<\/a><ul class='ez-toc-list-level-5'><li class='ez-toc-heading-level-5'><ul class='ez-toc-list-level-5'><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/ethis.co\/blog\/sukuk-taking-indonesia-storm\/#Sovereign_Sukuk_in_International_Market\" title=\"Sovereign Sukuk in International Market:\">Sovereign Sukuk in International Market:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/ethis.co\/blog\/sukuk-taking-indonesia-storm\/#Project_Financing_Government_Sukuk\" title=\"Project Financing Government Sukuk:\">Project Financing Government Sukuk:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/ethis.co\/blog\/sukuk-taking-indonesia-storm\/#Development_of_Domestic_Corporate_Sukuk\" title=\"Development of Domestic Corporate Sukuk:\">Development of Domestic Corporate Sukuk:<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Infrastructure_Issues_in_Indonesia\"><\/span>Infrastructure Issues in Indonesia:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure id=\"attachment_1316\" aria-describedby=\"caption-attachment-1316\" style=\"width: 1024px\" class=\"wp-caption alignnone\"><img decoding=\"async\" class=\"wp-image-1316 size-large\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Infrasturcture-issues-in-indonesia-1024x990.jpg\" alt=\"sukuk\" width=\"1024\" height=\"990\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Infrasturcture-issues-in-indonesia-1024x990.jpg 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Infrasturcture-issues-in-indonesia-300x290.jpg 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Infrasturcture-issues-in-indonesia-768x743.jpg 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Infrasturcture-issues-in-indonesia-32x32.jpg 32w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption id=\"caption-attachment-1316\" class=\"wp-caption-text\">Source: Author\u2019s Own<\/figcaption><\/figure>\n<h2><span class=\"ez-toc-section\" id=\"Infrastructure_Budget_Indonesia\"><\/span>Infrastructure Budget Indonesia:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure id=\"attachment_1317\" aria-describedby=\"caption-attachment-1317\" style=\"width: 1024px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"wp-image-1317 size-large\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Indo-infrastructure-budget-01-1024x1024.jpg\" alt=\"sukuk\" width=\"1024\" height=\"1024\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Indo-infrastructure-budget-01-1024x1024.jpg 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Indo-infrastructure-budget-01-150x150.jpg 150w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Indo-infrastructure-budget-01-300x300.jpg 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Indo-infrastructure-budget-01-768x768.jpg 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Indo-infrastructure-budget-01-32x32.jpg 32w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Indo-infrastructure-budget-01-50x50.jpg 50w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Indo-infrastructure-budget-01-64x64.jpg 64w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Indo-infrastructure-budget-01-96x96.jpg 96w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/Indo-infrastructure-budget-01-128x128.jpg 128w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption id=\"caption-attachment-1317\" class=\"wp-caption-text\">Source: Asian Financial Leaders Program, \u201cDeveloping Islamic Financial Centers in Indonesia and Opportunity &amp; Challenges of Islamic Banking\u201d<\/figcaption><\/figure>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">With present infrastructure financing limitations faced by the government, there has been growing recognition that Islamic finance can offer an alternative source of financing to help support the country\u2019s overall infrastructure development. Sukuk, which is an integral part of Islamic finance, can be an important pillar to support and partly shoulder the infrastructure financing needs given the nature of infrastructure projects that normally require large-scale and long-term financing which is suitable with the methods of raising funds through sukuk.<\/span><\/p>\n<p><!--[if lte IE 8]>\n<script charset=\"utf-8\" type=\"text\/javascript\" src=\"\/\/js.hsforms.net\/forms\/v2-legacy.js\"><\/script>\n<![endif]--><br>\n<script charset=\"utf-8\" type=\"text\/javascript\" src=\"\/\/js.hsforms.net\/forms\/v2.js\"><\/script><br>\n<script><br \/>\n  hbspt.forms.create({<br \/>\n\tportalId: \"2627399\",<br \/>\n\tformId: \"bba04de7-5725-459c-a309-dc8abc86ab1a\"<br \/>\n});<br \/>\n<\/script><\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Indonesia_Sukuk_A_Success_Story\"><\/span><b>Indonesia Sukuk: A Success Story<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">It is noteworthy to point out that effective and proper infrastructure development is essential for Indonesia to achieve a sustainable economic growth. Thus far, sukuk has provided a large portion of the infrastructure sector development around the globe, evident in both Muslim and non-Muslim countries. In the case of Indonesia, ever since its inaugural sukuk debut in the international market in year 2009, Indonesia has become the largest sukuk issuer globally in terms of USD outstanding amount, further highlighting the important standing of sukuk and Islamic finance in the country<\/span> <span style=\"font-weight: 400;\">(Sukuk for Infrastructure Development: Indonesia Experience, 1<\/span><span style=\"font-weight: 400;\">st<\/span><span style=\"font-weight: 400;\"> Annual Islamic Finance Conference: Sukuk for Infrastructure Financing and Financial Inclusion Strategy, Jakarta, 17 May 2016).&nbsp;<\/span><\/p>\n<h5><span class=\"ez-toc-section\" id=\"Sovereign_Sukuk_in_International_Market\"><\/span>Sovereign Sukuk in International Market:<span class=\"ez-toc-section-end\"><\/span><\/h5>\n<figure id=\"attachment_1319\" aria-describedby=\"caption-attachment-1319\" style=\"width: 1024px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"wp-image-1319 size-large\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/sovereign-sukuk-01-1024x708.jpg\" alt=\"sukuk\" width=\"1024\" height=\"708\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/sovereign-sukuk-01-1024x708.jpg 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/sovereign-sukuk-01-300x207.jpg 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/sovereign-sukuk-01-768x531.jpg 768w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption id=\"caption-attachment-1319\" class=\"wp-caption-text\">Source: Sukuk for Infrastructure Development: Indonesia Experience<\/figcaption><\/figure>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Of importance, in line with the <a href=\"http:\/\/www.lse.ac.uk\/GranthamInstitute\/law\/national-medium-term-development-plan-2015-2019-rpjmn-2015-2019\/\" target=\"_blank\" rel=\"noopener noreferrer\">RPJMN (National Long Term Development) 2015-2019 plans<\/a>, there have been several successful project financing government sukuk for the year 2013 till 2016 which focused on infrastructure development such as energy, telecommunications, transportation, agriculture, manufacturing, housing etc.<\/span><\/p>\n<h5><span class=\"ez-toc-section\" id=\"Project_Financing_Government_Sukuk\"><\/span>Project Financing Government Sukuk:<span class=\"ez-toc-section-end\"><\/span><\/h5>\n<figure id=\"attachment_1326\" aria-describedby=\"caption-attachment-1326\" style=\"width: 884px\" class=\"wp-caption alignnone\"><img decoding=\"async\" class=\"wp-image-1326 size-large\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/project-financing-sukuk-01-3-884x1024.jpg\" alt=\"sukuk\" width=\"884\" height=\"1024\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/project-financing-sukuk-01-3-884x1024.jpg 884w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/project-financing-sukuk-01-3-259x300.jpg 259w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/project-financing-sukuk-01-3-768x890.jpg 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/project-financing-sukuk-01-3.jpg 1250w\" sizes=\"(max-width: 884px) 100vw, 884px\" \/><figcaption id=\"caption-attachment-1326\" class=\"wp-caption-text\">Source: Sukuk for Infrastructure Development: Indonesia Experience<\/figcaption><\/figure>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The above further reaffirmed the suitability of sukuk towards infrastructure financing in Indonesia. Furthermore, from the year 2002 till 2015, the issuance of domestic corporate sukuk is at its highest in 2015, valued at IDR 3,172 billion with a total number of 15 issuances. This further reinstates the success of both sukuk and Islamic finance towards promoting an effective and proper infrastructure development in the country.<\/span><\/p>\n<h5><span class=\"ez-toc-section\" id=\"Development_of_Domestic_Corporate_Sukuk\"><\/span>Development of Domestic Corporate Sukuk:<span class=\"ez-toc-section-end\"><\/span><\/h5>\n<figure id=\"attachment_1328\" aria-describedby=\"caption-attachment-1328\" style=\"width: 1024px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"wp-image-1328 size-large\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/development-of-corporate-sukuk-01-1024x713.jpg\" alt=\"sukuk\" width=\"1024\" height=\"713\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/development-of-corporate-sukuk-01-1024x713.jpg 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/development-of-corporate-sukuk-01-300x209.jpg 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/development-of-corporate-sukuk-01-768x535.jpg 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/development-of-corporate-sukuk-01.jpg 1250w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption id=\"caption-attachment-1328\" class=\"wp-caption-text\">Source: Sukuk for Infrastructure Development: Indonesia Experience<\/figcaption><\/figure>\n<p><b>Concluding Remarks<\/b><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Today, Indonesia accounts for more than 4.8% of global Islamic banking assets (1Q2016) and total Islamic banking assets in the country is valued at USD21, 492 million (Asian Financial Leaders Program, \u201cDeveloping Islamic Financial Centers in Indonesia and Opportunity &amp; Challenges of Islamic Banking). Moreover, in the Islamic capital market industry, sukuk has proven to be successful in playing a key role in the overall infrastructure development of the country. In addition, apart from key role of sukuk towards the overall infrastructure development of the country, Indonesia has also witnessed successful collaborations with various Islamic finance multilateral bodies. For example, Jeddah-based Islamic Development Bank (IDB) and the Government of Indonesia have together launched projects in the areas of higher education, urban development and energy valued at USD488 million. <\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Finally moving forward, Indonesia is expected to attract more Islamic finance players in light of its robust economic prospects and rising consumer base. Islamic banking in Indonesia is likely to benefit all parties especially considering that the country falls within the top-10 Muslim countries that are conducive for Islamic finance development (Asian Financial Leaders Program, \u201cDeveloping Islamic Financial Centers in Indonesia and Opportunity &amp; Challenges of Islamic Banking). Meanwhile as part of the positive Islamic finance prospects, sukuk issuances by both infrastructure and corporates may continue to escalate to further support the country\u2019s infrastructure and market needs. And that summarises the recent sukuk storm coming from Indonesia.<\/span><\/p>\n\n\n<p>Read more on <a href=\"https:\/\/ethis.co\/blog\/sukuk-process-of-issuing-islamic-bonds\/\" target=\"_blank\" rel=\"noreferrer noopener\">Sukuk \u2013 The Process of Issuing Islamic Bonds<\/a><\/p>\n<div class=\"rns\" data-title=\"Sukuk: Taking Indonesia by Storm\" data-tags=\"Indonesia,islamic finance,Sukuk\" data-categories=\"Halal Investment,Islamic Finance\" data-comments=\"0\" data-date=\"1515556205000\" data-author=\"Shabana Binte Mahmoodul Hasan\" data-single=\"\" data-url=\"https:\/\/ethis.co\/blog\/sukuk-taking-indonesia-storm\/\"><\/div> <!-- Check out https:\/\/reactandshare.com -->","protected":false},"excerpt":{"rendered":"<p>&nbsp; Sukuk: Taking Indonesia by Storm Indonesia: A Brief Snapshot In the search for new Islamic finance markets and prospects, Indonesia remains a region with &hellip; <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/ethis.co\/blog\/sukuk-taking-indonesia-storm\/\">Read More &rsaquo;<\/a><\/span><\/p>\n","protected":false},"author":20,"featured_media":1315,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":""},"categories":[1753,119],"tags":[681,121,1401],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2018\/01\/ibrahim-kusuma.jpg","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbDwgm-l4","_links":{"self":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts\/1306"}],"collection":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/comments?post=1306"}],"version-history":[{"count":1,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts\/1306\/revisions"}],"predecessor-version":[{"id":6634,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts\/1306\/revisions\/6634"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/media\/1315"}],"wp:attachment":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/media?parent=1306"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/categories?post=1306"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/tags?post=1306"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}