INDONESIA: Indonesia’s
Financial Services Authority (OJK) is making the corporate Sukuk segment
a key priority this year in its bid to bolster the Republic’s fledgling
Islamic capital markets. Speaking to IFN, OJK’s deputy commissioner I for
banking supervision, Dr Mulya Siregar, said: “We are hoping to boost the
Shariah capital market through corporate Sukuk because the market
potential is significant.”
Explaining that the country has been gaining greater success with its
regular sovereign Sukuk issuance and seen phenomenal demand from
individual investors for retail Islamic securities, Dr Mulya said the
next natural step is to encourage corporates to issue Sukuk.
According to OJK data, 33 companies tapped the Sukuk market bringing the
cumulative value of corporate Sukuk issuance (as at the 6th
February) to IDR12.9 trillion (US$1.03 billion). Based on the outstanding
value of corporate Sukuk for that period – IDR7.1 trillion (US$568
million) – corporate Sukuk command a mere 3.2% of the total Shariah
securities market. The sovereign’s recent retail Sukuk sale raised
IDR21.97 trillion (US$1.76 billion) from individual investors.
Home to the world’s largest Muslim population, Indonesia’s Islamic
financial landscape has predominantly been skewed towards the retail
banking sector, leaving much room for its Sukuk market to grow. While the
Southeast Asian nation has the demographic advantage, the scope and
growth of its Islamic banking and finance industry lag behind neighboring
Malaysia.
Nonetheless, the country is progressively working towards achieving a
more holistic growth across the Shariah finance industry with regulation
enhancement as a key theme in its efforts. The OJK this year declared
2015 as the Shariah capital market year for the Republic during which the
authority will launch initiatives to accelerate the development of its
Islamic capital markets.
Focusing on three core components, the OJK’s ambitious Shariah capital
market plan includes the designing of new regulations on Shariah capital
market experts and enhancing existing regulations to better support the
issuance of Islamic securities; the formulation of a five-year framework
for the Islamic capital markets; and raising public awareness on Shariah
compliant financial products.
“We intend to integrate all segments of the Islamic finance industry
including banking, non-banking, [and] capital markets. And we are
exploring ways to utilize the widespread Islamic banking network to
support the development of the Shariah capital market,” explained Dr
Mulya.
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