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Indonesia unveils ‘waqf’ based 'sukuk'
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Pesantren (Islamic boarding school) students, locally known as santri, get ready to perform shalat dzuhur (afternoon prayers) at the school’s mosque after attending classes. (-/-)
B
ank Indonesia (BI) unveiled on Thursday a waqf (Islamic endowment)-based sukuk (Islamic bond), aimed at developing social property assets to be commercially self-sustaining.
BI Deputy Governor Hendar said the sukuk could further finance the development of commercial buildings such as office towers or shopping centers over waqf land. The coupon will be paid from the recurring income of the assets.
"There are many prospective waqf plots of land in Indonesia. If we build something productive there, it will generate more economic activity," he said during the Indonesia Sharia Economic Festival in Surabaya.
Hendar highlighted the Menara 165 office tower in Jakarta, a commercial building that was built over mortmain properties under waqf. Sukuk, he further said, could be issued by using the building as the underlying asset and the proceeds could be used to develop other assets.
According to Muhammad Anwar Basori, BI head of the sharia economic and finance department, waqf land was traditionally used for social and public purposes such as cemeteries, mosques, or pesantren (Islamic boarding schools).
Due to maintenance needs, the waqf asset manager usually collects money through spontaneous crowdfunding mechanisms such as asking for donations at the Mosque and even on the street. Waqf-based sukuk could be a solution for that, providing cash to cover maintenance costs.
"There are 400,000 hectares of waqf land in Indonesia, 90 percent of which are cost centers. In Kuwait and Singapore, they have built many productive assets on waqf land," he said. (ags)
