The Jakarta Post
The government launched on Friday retail sukuk SR013 to raise Rp 5 trillion (US$343 million) to fund the state budget in the face of the COVID-19 pandemic.
The tradable debt papers, set to mature on Sept. 10, 2023, offer a fixed annual yield at 6.05 percent, slightly lower than the sukuk issued in March that offered 6.3 percent yield per annum.
Investors can buy the bonds for Rp 1 million to Rp 3 billion from Aug. 28 and Sept. 23 at 31 partnering distributors, which include conventional and sharia-compliant banks, as well as online investment platforms such as Bareksa and Investree.
Dwi Irianti, the director of sharia-compliant financing at the Finance Ministry, expected the government to exceed the target of raised funds as investors’ appetite appeared large.
“Our focus is deepening the domestic market through the retail bonds to allow more people to [invest] in us, so we are not dominated by foreign investors,” Dwi said in a virtual presser on Friday.
With no plans to issue another global bond in the remainder of the year, the SR013 issuance emerged as a part of the government’s effort to raise Rp 900 trillion in the second half of the year to cover the widening budget deficit. The 2020 state budget deficit is estimated to reach 6.34 percent of GDP as the government allocates Rp 695.2 trillion for its pandemic response and has spent 25 percent of the budget thus far.
“As this is a government product to fund the budget and finance the pandemic response, people can invest while helping this nation in responding to COVID-19,” said Lucky Alfirman, the director general of financing and risk management at the ministry.
As of Aug. 6, the government has issued Rp 236.82 trillion in domestic sukuk, which nearly topped last year’s issuance of Rp 258.28 trillion.
Aidil Akbar, a financial planner, said Friday the SR013 was an attractive investment instrument for retail investors because it offered a higher yield and lower tax rate at 15 percent compared to banks’ time deposits. Investors can only gain 5.25 percent per annum from time deposits and incur a tax rate of 20 percent.
“It can be used for an emergency fund, practical fund and short-term fund. If you have money for next year’s expenses that has not been spent, just put it here,” said Aidil.
The government raised in July Rp 18.33 trillion from government retail bond issuance ORI-017, the highest proceeds ever recorded in an online bond offering by the country. The Finance Ministry booked the figure as individual investors flocked to safe-haven assets amid a volatile financial market due to uncertainties triggered by the COVID-19 outbreak.
The ministry reported that 42,733 investors bought the debt papers offered from June 15 to July 9. They were dominated by millennials, or people between 20 and 40 years old, followed by the age group of 41 to 55 years old and investors aged 54 to 74 years old.