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Tuesday, 17 May 2016

Sukuk plays important infrastructure development role

Sukuk has played a significant role in promoting resilient infrastructure and sustainable economic development, and therefore should be boosted in the future, Finance Minister Bambang Brodjonegoro has said.
In his opening remarks at a seminar during the Islamic Development Bank ( IDB ) Group annual meeting at the Jakarta Convention Center ( JCC ) on Monday, Bambang said it was important for Islamic finance to contribute to the sustainable development goals ( SDGs ).
"Sukuk naturally controls the needs of financing, which are based on underlying assets. It also provides a protective mechanism and natural hedging, making the industry more sustainable," Bambang said.
He further said that sukuk had played a significant role in infrastructure financing. Aside from issuing sukuk for general financing, the government has issued sukuk to finance infrastructure projects, such as railways and toll roads.
"This kind of project financing assures the effectiveness of sukuk," he went on.
Bank Indonesia ( BI ) Governor Agus Martowardojo added that sukuk had been growing rapidly in the last few years. However, Islamic financing instruments must be developed.
Indonesia has been active in sukuk markets since it laid the groundwork for sukuk issuance in 2007. This year, Rp 110.9 trillion ( US$ 8.33 billion ) in sukuk was issued in the domestic and international markets, according to ministry data.

Sukuk made up 15 percent of total outstanding government securities as of April 29. It comprises six instruments across a wide range of tenors, sizes, coupons and investors. 

(The Jakarta Post / 16 May 2016)
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