Evaluation of Implementing Sukuk for Infrastructure Financing in Indonesia Using the Analytic Network Process

Abstract

The Indonesian government has used sukuk to finance infrastructure since 2013. However, the issuance of sukuk for infrastructure financing is still low compared to the total value of available underlying assets because of many problems and barriers. This study aims to identify priority problems, solutions and strategies in the implementation of sukuk for infrastructure financing from the obligor perspective. The research uses analytic network process method. The results show that the priority of the problem is the low maximum limit for the issuance of sukuk for infrastructure, market risk, the realization of sukuk issuance for infrastructure is still low, the low sukuk market share compared to bonds, monitoring and evaluation of the use of funds is not optimal. The priority of the solution is to push to complete the project on time so that the burden of costs does not increase, increase the maximum limit for issuance of sukuk, increase the issuance of sukuk for infrastructure investment, optimize monitoring and evaluation of the use of funds, open up broad opportunities for foreign investors. The priority strategies are Synergy, innovation, and the use of IT.

Sukuk: fundamental properties And perspectives of development in Kazakhstan

“…Finally, market risk depends on the rate of return. The Sukuk that fixes the yield will reduce the income of the sukuk when there is an increase market returns (Fauziah et al, 2021).…”

Evaluation of Sovereign Sukuk as a government financing instrument with stakeholder theory: a moving forward policy from Indonesia’s experience

“…The findings show that there is a potential additional cost of debt because of hindrance in project implementation. In addition, the gap between implementation and planning reflects the weakness of the SBSN Project (Fauziah et al, 2021a(Fauziah et al, , 2021b. The latter was concluded by Aziza and Yaumbi (2020), who found that there is a potential loss of quality in state-owned assets in the event of negligence by parties in the settlement.…”

“…19 Year 2008, which is for state budget deficit and government project financing. Other research on Sovereign Sukuk evaluation mainly assesses the acceptance of investors (Fauziah et al , 2021a; Muchtar, 2021), Sharia law compliance (Adeagbo, 2021; Ahmed et al , 2019; Noordin et al , 2018), the performance of Sukuk as an investment instrument in the bond market (Bella et al , 2021; Solihat et al , 2020; Sukmana, 2020; Tülgen Çetin and Metlek, 2021) and the extended proposal for Sukuk fund utilisation (Al-Suwailem, 2021; Anindito Mujizat, 2021; Fauziah et al , 2021b; Handayani and Surachman, 2017; Hariyanto, 2020; Mawardi et al , 2021; Pribadi, 2020; Rusydiana and Irfany, 2021). None of the extant research discusses the effectiveness of Sukuk in financing government projects or evaluates the mechanism of Sukuk fund disbursement.…”