Padjadjaran University (Unpad) has signed an MoU with the Indonesian Waqf Board (BWI), becoming the first university to place endowment funds into cash Waqf-linked Sukuk (CWLS) on the 31st May 2023. BWI is hopeful for other universities to follow suit to tap the potential for the development of educational institutions through endowment funds.
Under the MoU, Unpad has contributed IDR50 billion (US$3.33 million) through a private placement for CWLS, which will channel proceeds toward educational, research and community service projects.
BWI is targeting to receive IDR1 trillion (US$66.65 million) in contributions from state colleges in CWLS next year.
“We are very confident that this will become an endorser or a mouthpiece, which other campuses can follow. Moreover, the Waqf investment in CWLS has many benefits … it’s an obligation, it’s no longer an option, campuses must have one imperatively.
“But this endowment fund cannot be silent, it must develop and invest in products that have good returns,” Dr Mohammad Nuh, the chairman of BWI, commented.
According to Dr Mohammad, placing endowment funds into Sukuk Waqf allows universities to develop educational institutions while not having to bear the risk and management responsibilities of the fund as CWLS are government-guaranteed.
In addition to contributing to educational development, Waqf funds also allow state colleges to tap funding beyond government financing.
According to BWI, some Indonesian state colleges collect up to IDR20 billion (US$1.33 million) annually in endowment funds.
Sharing its investment from universities, BWI noted that it received IDR50 billion from Institut Teknologi Sepuluh Nopember and IDR200 billion (US$13.33 million) from Institut Pertanian Bogor.
The Indonesian government has issued several CWLS facilities including retail and private placement offerings with the latest retail facility issued on the 7th July 2022 worth IDR38.25 billion (US$2.55 million). Its most recent private placement CWLS facility, in a twin offering, was issued on the 6th October last year worth IDR200 billion combined.