Indonesia SUKUK’s Project Financing Reached US$1.56B

Ground Breaking Project SUKUK At IAIN Surakarta - Photo by DG of Budget Financing and Risk Management of MoF

JAKARTA (TheInsiderStories) – Indonesian government reported project financing through State Sharia securities (SUKUK) worth of Rp22.53 trillion (US$1.56 billion) for a number ministries and agencies during January to July, one official said on Wednesday (25/07).

Director General of Financing and Risk Management for Finance Minister Luky Alfirman said, the funds consists of 587 projects spread over 34 provinces in seven ministries and institutions.

The seven ministries and institutions are the Ministry of Transportation, Ministry of Religious Affairs, Ministry of Public Works and Public Housing UPR, Ministry of Research, Technology and Higher Education, Ministry of Environment and Forestry, Institute of Science Indonesia, also the National Standardization Agency.

“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.

Aside become one of the state financing instruments, he continued, SUKUK issuance also aims to foster the growth and development of sharia financial markets in the country, and develop alternative investment instruments.

Last March, the government has published global SUKUK with a total value of $3 billion on the Singapore Stock Exchange (SSX) and Nasdaq Dubai. The SUKUK is divided into two series – Series A worth $1.25 billion with tenure of 5 years and Series B worth $1.75 billion with tenure of ten years.

So far, the Indonesian government is the largest SUKUK issuer on Nasdaq Dubai by value and number of listings, with securities now totaling $14.5 billion from 10 issuances.

Previously, finance ministry has issued $1.25 billion five-year green bond on Feb. 23, 2018, which is designed to comply with Sharia Law. This issuance marked Indonesia as the first Asian country to sell a sovereign green bond.

Meanwhile, beside use State budget, the government also prepared 34 projects with a total value of $26 billion under non-budget investment financing scheme also known as PINA, to domestic and foreign investors.

Of those projects, eight are considered as mega projects. They are a toll road in North Sumatra worth Rp13.4 trillion (PT Hutama Marga Waskita), two power plant projects worth Rp14.5 trillion (PT Pembangkit Jawa Bali), six power plant projects with a total value of Rp78.3 trillion (PT Indonesia Power), a Rp27.5-trillion power transmission project (PT Perusahaan Listrik Negara), a project to develop the second phase of Aero cityworth a total of Rp30 trillion (PT BIJB), a project to build Kulon Progo Airport in the Special Region of Yogyakarta worth Rp 6.7 trillion (PT Angkasa Pura I & PT PP Tbk), R80 Airplane worth Rp21.6 trillion (PT RAI), and Flores Integrated Area development valued at Rp13.5 trillion (Flores Prosperindo Ltd.).

Minister of National Development Planning/Head of the National Development Planning Agency, Bambang Brodjonegoro described the PINA as an alternative financing in the development of public infrastructure in Indonesia. There are currently 19 sectors that can be initiated in public-private partnership scheme with the government of Indonesia, encompassing the sectors of connectivity, urban development, and social developnment.

The government expects Public Private Partnerships (PPP) and PINA alternative financing scheme will be able to fill the financing gap in the infrastructure development of Indonesia.

the ministry has initiated the formation of the PPP Joint Office as a one-stop service and as a coordinating forum among the PPP stakeholders at the central government level, comprising seven Ministries and government agencies.

The PINA Centre that is currently in the Ministry of National Development Planning has the role of providing information on the progress of projects to investors in the context of realizing an investment climate that can promote investment activities in Indonesia.

In the first half (1H) of 2018, the government has issued bonds worth Rp192.6 trillion or equivalent to 46.5 percent of the target in the State Budget of 2018 worth Rp424, 5 billion.

Meanwhile, the outstanding debt of Indonesia reached Rp3,442.64 trillion consisting of rupiah denomination derived from Government Bond Rp2.028.67 trillion and Sharia Securities Rp391 trillion by the end of 2018. As for the foreign exchange denomination Rp799.71 trillion and global SUKUK Rp223.26 trillion.

US$1: Rp14,400