Short-Term Sukuk Regulation on the Way

 
Fathan Qorib, Andin Aditya Rahman
 
Bank Indonesia (BI) is looking to advance the Sharia sector by drafting a regulation on short-term sukuk (sharia bond). Related activity in the Sharia markets in Indonesia is still relatively insignificant to the national economy.
 
“The Sharia market still has a very small market volume,” stated Mirza Adityaswara, Senior Deputy Governor of BI on Monday.
 
This is evident he continued, as the Sharia market only constitutes 5 percent of the domestic banking sector. This figure is far behind Malaysia’s Sharia market, which contributes 25 to 30 percent of economic growth.
 
According to Mr. Adityaswara, the Indonesian government is somewhat progressive in utilizing Sharia markets by establishing frameworks for both retail and ordinary sukuk.
 
However, the number of sukuk in the corporate securities markets is still low. This is the reason why BI wants to establish a more comprehensive regulatory framework for short-term sukuk in an effort to further develop these Sharia instruments in Indonesia.
 
“Indeed, this must be continuously developed,” Mr. Adityaswara asserted.
 
Efforts to further develop Indonesian Sharia markets are also being undertaken by the Financial Services Authority (OJK) and the Islamic Development Bank (IDB).
 
Both institutions have drafted plans to strengthen the Sharia and micro financial markets. These plans will be contained in a financing and technical support arrangement between IDB and the Indonesian government.
 
Muliaman D. Hadad, Chairman of the Board of Commissioners of the OJK, believes that the development of Sharia finance must be integrated into multiple sectors, such as banking, capital markets, non-banking financial industries, and micro Sharia financial institutions.
 
“Under this framework, the OJK and IDB will have programs and capabilities to support the drafting of the said blueprint,” he concluded.
 
(hot/kc)