Sukuk; Unappreciated presence

"Sleeping Giant". That is what Indonesia is called by other people. I noted Dato Razief of Bank Negara Malaysia mention this expression in one of the seminar in which he becomes keynote speaker. It is because they know the potentialities of Indonesia in the term of population, economic resources, natural resources, financial resources, market and ... you mention it. But Indonesia still keeps silent, unmove and seems uninterested. Why?

A release of International Sukuk in 2009 that caused oversubscribe from USD. 500 million to USD. 650 million prove that the giant seems notice his presence and start to wake up. Based on 2008 Act No. 19 on "State Islamic Securities" the Sukuk, which is based on Ijara contract for certain national assets,  is popular  internationally as "sukuk al-manfa'a", other arabic term for sukuk based on "benefit". It is attractive for two reasons, the rate that it offers to investors and the rating that already increased. Indonesia country risk now goes down so that it bring the rating up into BBB+ from BB previously.

The history of Sukuk in Indonesia is not as easy as people think. Starting in 2002, when it was still called as Islamic bond, it was first issued by Indosat, an Indonesian private telecommunication company. The bond was based on Mudaraba contract which leads to prolong discussion because the term bond and Mudaraba gives opposite meaning. Bond refers to debt, while Mudaraba is a profit sharing contract which means investment, not debt. The reason the practitioners used bond is because the term "sukuk" is not yet familiar to the market, while the use of Mudaraba because the term is already known to everyone. Besides, only that kind of financing which is issued a fatwa by National Sharia Board into bond scheme. The fatwa on Ijara Islamic bond was introduced 2 years later when Matahari. a nation-wide private retail company planned to issue an Islamic bond, based on fixed rate payment.

Islamic Financial market in Indonesia should wait for 6 years, until Capital Market Supervisory Board (Bapepam) issued a guidance called "sukuk guidance" No. IX.13 A, in which all regulation on issuing Islamic Bond started to come up. It is the first time the term "sukuk" was introduced into market, and all institutions related to the sukuk issuance, bookbilding, marketing, sale and other, should refer to this regulation.


continued....