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Indonesia aims to raise about USD 580 mn from its first global 5-year Sukuk issue this year, targeting specifically Mideast investors among others, such as from Asia.

Press Release

Jakarta, 3rd March, 2009

The Islamic Development Bank Group (IDB Group) provided “Gold Sponsorship” to the 5th World Islamic Forum WIEF being held in Jakarta, Republic of Indonesia. In his speech in the Leadership Panel on “Innovative Solutions to Global Challenges”, HE Dr. Ahmad Mohamed Ali, President of the IDB Group praised WIEF for addressing these critical topics, and emphasized three avenues to new innovative solutions to meet global challenges, namely, ethics-based rather than rule-based financial governance structure, investment partnership with the poor and the vulnerable, and unleashing the God-given potential and innate strength of the full human resources. In his speech, he briefed the participants on IDB Group activities in meeting global challenges.

The first day of the Forum included two panel sessions titled “Leadership Panel” and “Global CEO Panel” followed by four plenary sessions namely; Beyond Scarcity: Overcoming the Global Food Crisis, Paving Greener World: Creating a Future for Alternative Energy, Stemming the Tide of the Global Financial Crisis, and Global SMEs: Business Beyond Boundaries.

John Aglionby reported on 23 February in the Financial Times that Indonesia is planning further after seing the first retail Sukuk being an outstanding success raising Rp 5,556bn (USD 466 mn) compared with the target of Rp 1,700 bn. The coupon rate is fixed at 12 per cent over three years and is paid monthly.

USD denominated Sukuk to retail investors and medium-term notes, the latter expected to be in the region of USD 3 bn, are still under consideration. The global sukuk and medium-term notes have been delayed after a successful international roadshow this month, pending parliamentary approval for the government’s revised budget.

Muhamad Al Azhari & Dion Bisara reported on 24 February in The Jakarta Globe that Indonesia raised Rp 5.56 trillion ($467 million) from the sale of the country’s first retail Islamic bonds, or retail sukuk , beating the sales target due to strong demand from investors, according to the finance minister.

The government initially aimed to raise Rp 1.77 trillion through the debt paper sale, but later raised that target to Rp 3.7 trillion as demand appeared to be strengthening. A 12 % of return was offered for the bonds, higher than premium-grade bank deposit rates of about 10 percent for preferred customers.

The debt papers were sold at a par, or face value, of Rp 1 million per unit, with a minimum purchase of Rp 5 million. The sukuk has a fixed payout on the 25th of each month and matures on Feb. 25, 2012.

Indonesia plans to issue regular domestic Sukuk Al Ijara with a maturity of 5 years or more according to the finance ministry. The currency is not yet decided.

Ellina Badri reported in The Edge Daily about the memorandum of understanding between Bank Islam Malaysia Bhd and Bank Muamalat Indonesia Bhd for the distribution of Islamic trust products.

Islamic trusts involve investments made following syariah principles and asset distribution according to Islamic rules of succession. The range of Islamic trust products include will-writing and estate administration services, and waqf, or a gift of property for religious or charitable purposes.

Bank Indonesia plans to reduce the capital adequacy ratio (CAR) for conventional banks wishing to set up a shariah commercial bank through a spin-off from Rp 1 trillion to Rp 500 billion as of March.

The Islamic Corporation for the Development of the Private Sector (ICD), looks into establishing an Islamic bank in Indonesia as partner.

Business Times reported on 30 January PT Bank Negara Indonesia, the nation’s third-largest state financial services company, plans its first Islamic debt sale in Malaysia, president director Gatot Suwondo said.

Plans are about USD 50 mn, with a 5-year and 10-year maturity if the pricing is attractive.

Indonesia has set a coupon rate of 12 % for its first 3-year retail Sukuk, which is due to be issued on Feb. 25 according to the ministry of finance.

Reuters reported on 7 January that Indonesia's finance ministry plans to issue Sukuk for retail investors in February to help finance the state budget said Rahmat Waluyanto, treasury director general at the finance ministry. The yield shall be announced on 5 February and be offered till 20 February, listing on the bourse follows on 26 February.

Reuters reported on 31 December that Indonesia plans to issue international bonds, and Sukuk. Timing is not scheduled yet. Treasury Director General Rahmat Waluyanto was quoted.

More background: http://in.reuters.com/article/asiaCompanyAndMarkets/idINJAK38567320081231

Harry Suhartono from Reuters reported on 8 April that Indonesia's finance ministry plans for the second half of the year 2008 two Sukuk domestically and international following the approval of the new bill.

Indonesia's finance ministry plans to sell Islamic bonds in the international and domestic markets in the second half of 2008, a senior official said late on Monday following the approval of new bill on Islamic debt.

Rahmat Waluyanto is the treasury director general at the finance ministry. According to him the ministry has suitable underlying assets worth 15 trillion rupiah (USD 1.63 bn).

Finance Minister Sri Mulyani Indrawati said it might take between one to 1.5 months for the ministry to draw up the necessary regulations following the approval of the bill.

Source: http://in.reuters.com/article/asiaCompanyAndMarkets/idINJAK28409420080408

More information in regard to the Sukuk bill:
http://in.reuters.com/article/asiaCompanyAndMarkets/idINJAK29608520080408

Khaleej Times reported on 26 March about The Islamic Corporation for the Development of the Private Sector (ICD), an arm of the Jeddah-based Islamic Development Bank (IDB).
 
According to Khaled M. Al Aboodi, the new CEO, international projects include the feasibility study to establish an Islamic bank in Maldives and further studies regarding sukuk issues of banks in Mauritania and Indonesia. ICD has also initiated an Islamic investment bank in Azerbaijan.
 
In Saudi-Arabia ICD has established a real estate company called Ewaan, which is capitalised at SR4 00 mn. The company plans to build housing complexes for the low and middle-income people.
 
ICD provides a variety of financial products to its clients such as direct financing through equity participation, term-financing, line of financing to commercial banks and national development financing institutions (NDFIs), short-term corporate finance, asset management, structured financing, and advisory services to private and public companies.
 
Source:

The Guardian reported on 17th March about the takaful business of Prudential. Prudential is looking to expand into Egypt as the executive who runs the insurer's fast-growing Asian business seeks other markets with scope for rapid growth, like before Indonesia, where 25% of all sales in the fourth quarter of 2007 were sharia-compliant products.

Figures on Friday showed that profits of the Pru's Asian operations broke through £1bn for the first time in 2007 and now match the profits achieved by the insurer's traditional UK operations.

Stowe is already responsible for 13 countries. In India, he believes Pru can soon overtake the state-owned insurer that occupies the number-one slot in the country.

Source: http://www.guardian.co.uk/money/2008/mar/17/islamicfinance.insurance?gus...