Indonesia prepared Rp27.35 trillion (US$1.95 billion) project financing through state sharia securities (SUKUK) this year - Photo: Antara.

JAKARTA (TheInsiderStories) – The Indonesian government has prepared Rp27.35 trillion (US$1.95 billion) project financing through state sharia securities (SUKUK) this year, officials said on Thursday (01/23). The allocation is slightly lower compared to Rp28.34 trillion set in 2019.

The funding allocations have been adjusted to the ministry of national development planning, said Luky Alfirman, director-general of financing and risk management of finance ministry.

“We always scrutinize, we see alternative financing schemes of each ministry and institution which have also received funding allocations from the state budget. After we review, the figure is Rp27.35 trillion,” Alfirman said at the 2020 sukuk project kick-off forum in Jakarta.

Every year the value of project financing through Sukuk tends to increase. The funds aim to finance the construction of various infrastructure projects. Besides, Sukuk issuance also aims to foster the growth and development of sharia financial markets in the country and develop alternative investment instruments, Alfirman adds.

Until January 16, the issuance of Sukuk has reached Rp1,230.44 trillion with an outstanding of Rp738.37 trillion through the method of issuing auctions, book building, and private placement, it said.

Although the value of infrastructure project Sukuk allocations is smaller, funding is provided for more work units and projects. This year the allocation is aimed at 17 echelons units in eight ministries and institutions for 728 projects spread throughout Indonesia.

“Sukuk is part of efforts to strengthen the financing capacity of the state budget. The government always continue to develop various financing instruments,” he said.

The public works and public housing ministry is still the largest infrastructure project Sukuk financing allocation. This year, there are 171 road and bridge infrastructure projects that will be built with sukuk financing, and 66 water resource infrastructure projects such as irrigation, reservoirs, dams, lakes, drainage, to flood and lava control.

Last week, the government has conducted a state sukuk auction for the series SPNS15072020, PBS002, PBS026, and PBS005 through the Bank Indonesia system. The total incoming bids were recorded at Rp59.14 trillion. While the total nominal won from the four series offered is Rp7 trillion.

This year the finance ministry is targeting net issuance of government bonds worth Rp389.32 trillion. In the first quarter of 2020, the government targeted the issuance of the bonds worth Rp165.50 trillion from seven government bonds and six state sukuk auctions. In the first auction of this year in January, the government scooped up funds of Rp20 trillion from total incoming bids of Rp81.54 trillion.

US$1=Rp14,000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com