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Tuesday, October 4, 2022

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Indonesian government receives largest orderbook for social cash Waqf Sukuk

The Indonesian government has recorded its largest orderbook for a Sukuk Waqf issuance. Taking place from the 11th April to the 7th July 2022, the sale of cash Waqf-linked Sukuk (CWLS) series SWR003 attracted IDR38.25 billion (US$2.55 million)-worth of purchase orders. The two-year retail offering offers a fixed rate annual coupon of 5.05% with proceeds channeled toward social programs including productive economic Waqf programs for SMEs, food security and solar projects, among others.

The issuance is the third in the series of CWLS issued by the Indonesian government, the first of which opened for bidding from the 9th October to the 12th November 2020. The investors of the third issue were overwhelmingly individuals with only one institutional investor out of the 688 total investors. Online orders played a significant role in the issue, contributing to 71% of nominal orders with 94.04% of investors placing orders online. The series continued to see participation from new investors with 619 new investors placing orders, contributing to 89.97% of the total investors.

“The issuance of the retail CWLS series is one of the government’s commitments to support the National Waqf Movement and assist the development of social investment and productive Waqf development in Indonesia. Through the CWLS retail series, the government will facilitate cash Waqf to place it in safe and productive investment instruments,” a statement from the Indonesian government issued by the Directorate General of Financing and Risk Management read.

The cash Waqf facility is based on the Wakalah concept using government assets and projects as underlying assets. The government has appointed six Islamic banks as distribution partners which will distribute funds to 10 foundations acting as the managers of the Waqf. The proceeds will contribute to various social programs in the country.

Figure 1: Distribution partners and social programs
Distribution partner Waqf manager Social programs
Bank Syariah Indonesia Yayasan BSMU – Village economic program: Sheep and goat breeding
– MSME program: Islamic boarding school-based business cluster development
LazisMU – Community sanitization program
– MSME empowerment program
Badan Wakaf Indonesia – General programs
Bank Muamalat Indonesia Baitulmaal Muamalat – Zakat program
– Village livestock construction program
Wakaf Salman – Energy security: installation of solar panels for the Salman ITB Mosque
– Food security: urban farming in mosques in urban areas
Bank Mega Syariah Badan Wakaf Indonesia – General programs
– Food security
Bank Syariah Bukopin Yayasan Wakaf Bangun Nurani Bangsa – Community livestock empowerment
– Quran school renovation
Yayasan Global Wakaf – Productive livestock Waqf
– Productive economic Waqf
Bank CIMB Niaga Syariah Yayasan Dompet Dhuafa Republika – Social missionary program
– Medical equipment procurement program
Bank Permata Syariah Yayasan Pesantren Islam Al-Azhar – Cattle farmer empowerment
Source: DJPPR

With the government closing its first issue of the series in November 2020, the second issue in June 2021 and the current issue in July 2022, we can reasonably say that the CWLS series will be a regular Sukuk issue for the Indonesian government. We may also see new developments for the series as the first issue matures in November this year.

Indonesian Government SWR003 cash Waqf-linked Sukuk

IDR38.25 billion (US$2.55 million)

7th July 2022
Summary of terms and conditions
Issuer
Indonesian government
Size of issue
IDR38.25 billion (US$2.55 million)
Mode of issue
Retail
Purpose
Funding social projects
Tenor
Two years
Issuance price
IDR38.25 billion
Profit Rate
5.05% per annum
Payment
Annual
Currency
Indonesian rupiah
Maturity date
7th July 2021
Governing law
Indonesian law
Islamic structure
Wakalah
Underlying asset
Government assets and projects
Investor breakdown
Individual investors, institutional investors

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