Indonesia on Friday (Oct 9) issued a retail
cash waqf-linked sukuk as part of the government’s efforts to finance the
recovery of the pandemic-hit economy.
The offering period for the retail sukuk is
October 9 to November 12. Investors can put in from 1 million rupiah ($68)
through four distribution partners Bank Muamalat, Bank Syariah Mandiri, BNI
Syariah, and BRI Syariah.
The wakalah-based retail sukuk is guaranteed
by the government and cannot be traded on the secondary market. It has a
two-year tenure and offers a fixed rate of return of 5.5% per year. The first
coupon payment is scheduled for December 10.
Proceeds will benefit Yayasan Hasanah Titik,
Dompet Dhuafa, LazisMu, LazisNu, Baitulmaal Muamalat, Wakaf BSM Umat and Wakaf
Salman and LAZ IPB, according to Luky Alfirman, Director General of Budget Financing
and Risk Management at the Ministry of Finance.
“They will channel the return on investment
or yield for Islamic social and commercial financing such as education
(scholarships), health (hospitals) and financing MSMEs,” said Luky.
The government has not set a target for the
retail sukuk and will adapt to market appetite during the subscription period,
according to the official.
Finance minister Sri Mulyani Indrawati said
in an online call to investors on Friday the retail cash waqf-linked sukuk is
part of government initiatives to continue the innovation of Islamic financial
products and increase awareness of Shariah-compliant investments.
The finance ministry—in collaboration with
the Ministry of Religious Affairs, the central bank and the national waqf
agency (Badan Wakaf Indonesia)—is exploring new instruments that can maximise
the potential of waqf. The ministry believes the potential for cash waqf is 200
trillion rupiah annually and hopes that at least 20%, or around 40 trillion rupiah,
can be collected each year.
“We have so much potential for retail waqf. I
believe if we compare it to retail government Islamic bonds (SBSN) that have
reached 203.6 trillion rupiah, the retail waqf could also be worth hundreds of
trillions of rupiah,” said the minister.
“Yet the realization is still very low, only
about 255 billion rupiah over the last three years. We have been actively
developing waqf-linked sukuk instruments since the IMF-World Bank annual
meeting in Bali in 2018.”
The sovereign this year issued a cash
waqf-linked sukuk of 50.8 billion rupiah ($3.46 million) in March. The
discounting of the five-year tenure sukuk is used for the development of new
waqf assets, renovations and procurement of retina and glaucoma center in
Serang in Banten. The monthly yield will be used for free cataract surgeries
for the poor with a target of 2,500 patients. It is also allocated for the
procurement of an ambulance.
“People’s income and awareness of Shariah
investment instruments is on the rise,” said Sri Mulyani.
“Up to now, we have 347,145 retail investors
with investment value of 203.6 trillion rupiah and 72,036 savings investors
with investment value of 16.7 trillion rupiah. Combined, there are 419,184
investors with investment value of 220.3 trillion rupiah,” she added.
In other waqf-related transactions, the
central bank on Oct 7 collected 30.32 billion rupiah from an auction of waqf
assets. The regulator worked with the national waqf agency and Forum Wakaf
Produktif on that transaction.