The Potential of Municipal Sukuk Issuance in Indonesia - A Review of Theoretical Research Potensi Penerbitan Sukuk Daerah di Indonesia - Tinjauan Penelitian Teoritis
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Published:
Jun 5, 2023
Keywords:
Municipal Sukuk, Riba, Islamic Capital Market, Infrastructure
Main Article Content
Abstract
The main objective of this study is to provide local authorities with municipal Sukuk as an alternative to financing local infrastructure and developing areas. This study reviews the previous literature examining contemporary municipal sukuk and Discussed issues related to restrictions on the issuance of municipal sukuk. The research shows that the barriers to municipal Sukuk issuance are: Regional Barriers, Credit risk, Political Risk, Credit Weakness among stakeholders, Lack of through understanding of Shariah and financing and implementation. It was an exploratory study and aimed to identify barriers to becoming municipal bonds. Blocks of municipal Sukuk are listed from all possible sources. The study proposes some practical ways to overcome the obstacles to the provision of municipal sukuk in order to promote more municipal sukuk in various regions of the country to support sustainable development through equitable infrastructure distribution.
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Articles
Copyright (c) 2023 Indar Fauziah Ulfah
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Cuny, C. (2018). When knowledge is power: Evidence from the municipal bond market. Journal of Accounting and Economics, 65(1), 109–128. https://doi.org/10.1016/j.jacceco.2017.11.002
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Lin, C. W., Wang, J. C., Zhong, B. Y., Jiang, J. A., Wu, Y. F., Leu, S. W., & Nee, T. E.
(2021). Lie symmetry analysis of the effects of urban infrastructures on residential property values. PLoS ONE, 16(8 August), 1–15. https://doi.org/10.1371/journal.pone.0255233
Majumdar, S., & Puthiya, R. (2021). Role of signaling in issuance of sukuk versus conventional bonds – an empirical analysis of the bond market in the UAE. International Journal of Islamic and Middle Eastern Finance and Management, 14(5),
967–981. https://doi.org/10.1108/IMEFM-02-2020-0093
Mawardi, I., Widiastuti, T., & Al Mustofa, M. U. (2022). Constraints and strategies for municipal Sukuk issuance in Indonesia. Journal of Islamic Accounting and Business Research, 13(3), 464–485. https://doi.org/10.1108/JIABR-03-2021-0082
Muharam, H., Anwar, R. J., & Robiyanto, R. (2019). Islamic stock market and sukuk market development, economic growth, and trade openness (The case of Indonesia and Malaysia). Business: Theory and Practice, 20(2014), 196–207. https://doi.org/10.3846/BTP.2019.19
Noordin, N. H., Haron, S. N., Hasan, A., & Hassan, R. (2018). Complying with the requirements for issuance of SRI sukuk: the case of Khazanah’s Sukuk Ihsan. Journal of Islamic Accounting and Business Research, 9(3), 415–433. https://doi.org/10.1108/JIABR-02-2016-0024
Odusami, B. O., & Mansur, I. (2022). Economic Fundamentals, Policy Responses, and State- Level Municipal Bond Sensitivity to COVID-19 Prevalence. North American Journal of Economics and Finance, 61(November 2021), 101693.
https://doi.org/10.1016/j.najef.2022.101693
Oh, H. Y. P., Humaidi, M., Chan, Q. Y., Yap, G., Ang, K. Y., Tan, J., Ng, L. C., &
Mailepessov, D. (2022). Association of rodents with man-made infrastructures and food waste in Urban Singapore. Infection Ecology and Epidemiology, 12(1). https://doi.org/10.1080/20008686.2021.2016560
Osman, A. Z., & Agyemang, G. (2020). Privileging downward accountability in Waqf management. Journal of Islamic Accounting and Business Research, 11(3), 533–554. https://doi.org/10.1108/JIABR-05-2017-0064
Ridwan, R., & Mayapada, A. G. (2020). Does sharia governance influence corporate social responsibility disclosure in Indonesia Islamic banks? Journal of Sustainable Finance and Investment, 0(0), 1–20. https://doi.org/10.1080/20430795.2020.1749819
Santoso, I. R., Siswantoro, D., Surya, H. V., Liu, F. H. M., Lai, K. P. Y., Keshminder, J. S.,
Abdullah, M. S., Mardi, M., Yousaf, I., Suleman, M. T., Demirer, R., Naeem, M. A., Raza Rabbani, M., Karim, S., Billah, S. M., Febi, W., Schäfer, D., Stephan, A., & Sun,
C. (2021). Religion vs ethics: hedge and safe haven properties of Sukuk and green bonds for stock markets pre- and during COVID-19. Qualitative Research in Financial Markets, ahead-of-p(1), 76–94. https://doi.org/10.1108/QRFM-04-2021-0049
Siswantoro, D., & Surya, H. V. (2021). Indonesian Green Sukuk (Islamic Bond) of climate change: A revisited analysis. IOP Conference Series: Earth and Environmental Science, 716(1). https://doi.org/10.1088/1755-1315/716/1/012044
Smaoui, H., Mimouni, K., & Temimi, A. (2020). The impact of Sukuk on the insolvency risk of conventional and Islamic banks. Applied Economics, 52(8), 806–824. https://doi.org/10.1080/00036846.2019.1646406
Utami, D. E., & Irawati, Z. (2021). The role of the financial and macroeconomy industry on the development of the sukuk (Sharia compliant bonds) market: The case of Indonesia. Academic Journal of Interdisciplinary Studies, 10(4), 225–236. https://doi.org/10.36941/AJIS-2021-0112
Wang, Z. J., & Yang, J. (2021). Cross-trading and liquidity management: Evidence from municipal bond funds. Pacific Basin Finance Journal, 67(November 2020), 101564. https://doi.org/10.1016/j.pacfin.2021.101564
Wilson, R. (2016). Credit cards: Contemporary issues from economic and shariah perspective. Journal of King Abdulaziz University, Islamic Economics, 29(1), 83–87. https://doi.org/10.4197/Islec.29-1.6
Wong, M. C. S., & Bhatti, W. M. (2019). Developing international sukuk in East Asia: Implications from Hong Kong sukuk. Journal of Asian Finance, Economics and Business, 6(4), 9–17. https://doi.org/10.13106/jafeb.2019.vol6.no4.9
Ahmed, H. (2019). Fiscal policy and deficit financing: Islamic perspectives. Journal of King Abdulaziz University, Islamic Economics, 32(1), 79–85. https://doi.org/10.4197/Islec.32- 1.5
Al-Ajlouni, A., & AL Habeeb, M. (2022). Municipal Sukuk as a Model for Financing Municipalities and Public Service Institutions in Saudi Arabia. SSRN Electronic Journal, 1–23. https://doi.org/10.2139/ssrn.4101102
Aladdin, A. A., Gordienko, M., Nekrasova, V., & Javid, A. F. (2020). Fiscal potential of the investment mechanism of Islamic finance. E3S Web of Conferences, 220, 1–5. https://doi.org/10.1051/e3sconf/202022001012
Allegrante, J. P., & Sleet, D. A. (2021). Investing in public health infrastructure to address the complexities of homelessness. International Journal of Environmental Research and Public Health, 18(16). https://doi.org/10.3390/ijerph18168887
Ardiansyah, I. H., & Lubis, D. (2018). Pengaruh Variabel Makroekonomi terhadap Pertumbuhan Sukuk Korporasi di Indonesia. Al-Muzara’ah, 5(1), 51–68. https://doi.org/10.29244/jam.5.1.51-68
Baita, A. J., & Mustafa, D. (2019). Appraisal of economic benefits of sukūk in financing budget deficits in Nigeria. Journal of King Abdulaziz University, Islamic Economics, 32(1), 145–158. https://doi.org/10.4197/Islec.32-1.11
Balli, F., Ghassan, H., Essam, ·, Al Jeefri, H., & Al Jeefri, E. H. (123 C.E.). Sukuk and bond spreads. Journal of Economics and Finance. https://doi.org/10.1007/s12197-021-09545- 9
Bintarti, S., & Fahamsyah, M. H. (2018). Improving tourism quality by islamic finance.
European Research Studies Journal, 21(1), 393–401. https://doi.org/10.35808/ersj/957
Cornaggia, K., Hund, J., & Nguyen, G. (2022). Investor attention and municipal bond returns.
Journal of Financial Markets, September 2021, 100738. https://doi.org/10.1016/j.finmar.2022.100738
Cuny, C. (2016). Voluntary disclosure incentives: Evidence from the municipal bond market. Journal of Accounting and Economics, 62(1), 87–102. https://doi.org/10.1016/j.jacceco.2016.04.004
Cuny, C. (2018). When knowledge is power: Evidence from the municipal bond market. Journal of Accounting and Economics, 65(1), 109–128. https://doi.org/10.1016/j.jacceco.2017.11.002
Darus, F., Ahmad Shukri, N. H., Yusoff, H., Ramli, A., Mohamed Zain, M., & Abu Bakar, N.
A. (2017). Empowering social responsibility of Islamic organizations through Waqf.
Research in International Business and Finance, 42(May), 959–965.
https://doi.org/10.1016/j.ribaf.2017.07.030
Hafiz, O. Z. (2019). Sukūk: A Sharī’ah compliant tool for financing budget deficits. Journal of King Abdulaziz University, Islamic Economics, 32(1), 119–124. https://doi.org/10.4197/Islec.32-1.9
Hirsch, J. A., Meyer, K. A., Peterson, M., Zhang, L., Rodriguez, D. A., & Gordon-Larsen, P. (2017). Municipal investment in off-road trails and changes in bicycle commuting in Minneapolis, Minnesota over 10 years: A longitudinal repeated cross-sectional study. International Journal of Behavioral Nutrition and Physical Activity, 14(1), 1–9. https://doi.org/10.1186/s12966-017-0475-1
Ibrahim, A. J., & Shirazi, N. S. (2020). The role of islamic finance in fostering circular business investments: The case of oic countries. Journal of Economic Cooperation and Development, 41(1), 89–120.
Kahf, M., & Al-Saudi, H. (2016). Special purpose vehicles and corporate Sukūk: How true is “True Sale”? Journal of King Abdulaziz University, Islamic Economics, 29(2), 3–21. https://doi.org/10.4197/Islec.29-2.1
Keshminder, J. S., Abdullah, M. S., & Mardi, M. (2022). Green sukuk – Malaysia surviving the bumpy road: performance, challenges and reconciled issuance framework. Qualitative Research in Financial Markets, 14(1), 76–94. https://doi.org/10.1108/QRFM-04-2021-0049
Khan, S. U., Khan, I. U., Khan, I., Din, S. U., & Khan, A. U. (2020). Evaluating ṣukūk investment intentions in Pakistan from a social cognitive perspective. ISRA International Journal of Islamic Finance, 12(3), 347–365. https://doi.org/10.1108/IJIF-12-2019-0194
Lin, C. W., Wang, J. C., Zhong, B. Y., Jiang, J. A., Wu, Y. F., Leu, S. W., & Nee, T. E.
(2021). Lie symmetry analysis of the effects of urban infrastructures on residential property values. PLoS ONE, 16(8 August), 1–15. https://doi.org/10.1371/journal.pone.0255233
Majumdar, S., & Puthiya, R. (2021). Role of signaling in issuance of sukuk versus conventional bonds – an empirical analysis of the bond market in the UAE. International Journal of Islamic and Middle Eastern Finance and Management, 14(5),
967–981. https://doi.org/10.1108/IMEFM-02-2020-0093
Mawardi, I., Widiastuti, T., & Al Mustofa, M. U. (2022). Constraints and strategies for municipal Sukuk issuance in Indonesia. Journal of Islamic Accounting and Business Research, 13(3), 464–485. https://doi.org/10.1108/JIABR-03-2021-0082
Muharam, H., Anwar, R. J., & Robiyanto, R. (2019). Islamic stock market and sukuk market development, economic growth, and trade openness (The case of Indonesia and Malaysia). Business: Theory and Practice, 20(2014), 196–207. https://doi.org/10.3846/BTP.2019.19
Noordin, N. H., Haron, S. N., Hasan, A., & Hassan, R. (2018). Complying with the requirements for issuance of SRI sukuk: the case of Khazanah’s Sukuk Ihsan. Journal of Islamic Accounting and Business Research, 9(3), 415–433. https://doi.org/10.1108/JIABR-02-2016-0024
Odusami, B. O., & Mansur, I. (2022). Economic Fundamentals, Policy Responses, and State- Level Municipal Bond Sensitivity to COVID-19 Prevalence. North American Journal of Economics and Finance, 61(November 2021), 101693.
https://doi.org/10.1016/j.najef.2022.101693
Oh, H. Y. P., Humaidi, M., Chan, Q. Y., Yap, G., Ang, K. Y., Tan, J., Ng, L. C., &
Mailepessov, D. (2022). Association of rodents with man-made infrastructures and food waste in Urban Singapore. Infection Ecology and Epidemiology, 12(1). https://doi.org/10.1080/20008686.2021.2016560
Osman, A. Z., & Agyemang, G. (2020). Privileging downward accountability in Waqf management. Journal of Islamic Accounting and Business Research, 11(3), 533–554. https://doi.org/10.1108/JIABR-05-2017-0064
Ridwan, R., & Mayapada, A. G. (2020). Does sharia governance influence corporate social responsibility disclosure in Indonesia Islamic banks? Journal of Sustainable Finance and Investment, 0(0), 1–20. https://doi.org/10.1080/20430795.2020.1749819
Santoso, I. R., Siswantoro, D., Surya, H. V., Liu, F. H. M., Lai, K. P. Y., Keshminder, J. S.,
Abdullah, M. S., Mardi, M., Yousaf, I., Suleman, M. T., Demirer, R., Naeem, M. A., Raza Rabbani, M., Karim, S., Billah, S. M., Febi, W., Schäfer, D., Stephan, A., & Sun,
C. (2021). Religion vs ethics: hedge and safe haven properties of Sukuk and green bonds for stock markets pre- and during COVID-19. Qualitative Research in Financial Markets, ahead-of-p(1), 76–94. https://doi.org/10.1108/QRFM-04-2021-0049
Siswantoro, D., & Surya, H. V. (2021). Indonesian Green Sukuk (Islamic Bond) of climate change: A revisited analysis. IOP Conference Series: Earth and Environmental Science, 716(1). https://doi.org/10.1088/1755-1315/716/1/012044
Smaoui, H., Mimouni, K., & Temimi, A. (2020). The impact of Sukuk on the insolvency risk of conventional and Islamic banks. Applied Economics, 52(8), 806–824. https://doi.org/10.1080/00036846.2019.1646406
Utami, D. E., & Irawati, Z. (2021). The role of the financial and macroeconomy industry on the development of the sukuk (Sharia compliant bonds) market: The case of Indonesia. Academic Journal of Interdisciplinary Studies, 10(4), 225–236. https://doi.org/10.36941/AJIS-2021-0112
Wang, Z. J., & Yang, J. (2021). Cross-trading and liquidity management: Evidence from municipal bond funds. Pacific Basin Finance Journal, 67(November 2020), 101564. https://doi.org/10.1016/j.pacfin.2021.101564
Wilson, R. (2016). Credit cards: Contemporary issues from economic and shariah perspective. Journal of King Abdulaziz University, Islamic Economics, 29(1), 83–87. https://doi.org/10.4197/Islec.29-1.6
Wong, M. C. S., & Bhatti, W. M. (2019). Developing international sukuk in East Asia: Implications from Hong Kong sukuk. Journal of Asian Finance, Economics and Business, 6(4), 9–17. https://doi.org/10.13106/jafeb.2019.vol6.no4.9