Materi Seminar OJK Abdul Qoyum

8/12/2019 Materi Seminar OJK Abdul Qoyum

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Islamic Finance in the Era of

Finacial Service Authority (OJK)

Abdul Qoyum, SEI, M.Sc.Fin

Presented in Seminar Nasional

Convention Hall UIN Sunan Kalijaga Yogyakarta

08 February 2014


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Outline

1. Islamic Finance?

2. statistics of world Islamic finance

3. Islamic finance in Indonesia (Islamic banking,sukuk, islamic equity, islamic unit trust, etc)

4. Problem of Islamic finance development inIndonesia

5. Some Policy of OJK in developping Islamic finance.


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Islamic FinanceIslamic finance or shariah finance?............

1. Financial system which is developped based on an islamicworldview

2. Financial system based on Islamic value

3. Islamic finance objective is to realize maslahah (manfaat andberkah) and realize maqosid syariah. Dharuriyyat (religion,self, mind, progeny and wealth), hajiyyat and tahsiniyyat.

4. Basic principle of islamic finance: no riba, no gharar, nomaysir and halal activities.

5. Islamic finance is finance which is based on Iman, Islam andIhsan.


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Islamic Finance...1. Islamic finance should support economic activities,

optimal level of economic growth, low and stableinflation, low unemployement, Alleviate poverty, Support

international Trade.2. Islamic finance is Equity base Financial system, not debt-

base.

3. Islamic finance is Real-sector base finacial system


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Competitiveness in Islamic Finance


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Indikator Keuangan Islam Dunia


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Statistics


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Islamic Finance Assets


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Islamic Banking


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Sukuk Market


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Knowledge Indicator


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Governance


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Shariah Governance

d d


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CSR Fund and Awarness


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October 2013, the annual growth of Islamic banking (Islamic Banks / BUS/ UUS)was recorded 32% with total assets of Rp229, 5 billion, total financing Rp179, 3billion and total deposits of Rp174 trillion. The number of Islamic banks listed 11banks, UUS is 23 units and BPRS has reached the number of 160, bank offices is2932, increase of 269 compared 2012.


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Sukuk

0

20,000

40,000

60,000

80,000

100,000

120,000

Jan-0

9

Mar-09

May-0

9

Jul-09

Sep-0

9

Nov-0

9

Jan-1

0

Mar-10

May-1

0

Jul-10

Sep-1

0

Nov-1

0

Jan-1

1

Mar-11

May-1

1

Jul-11

Sep-1

1

Nov-1

1

Jan-1

2

Mar-12

May-1

2

Jul-12

Sep-1

2

Nov-1

2

Jan-1

3

Mar-13

InB

illionR

upiah

Sovereign Sukuk (SBSN) issuance

SUKUK (SBSN)*


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the number of companies issuing sukuk in Indonesia is very few.

According to www.asiamoney.com, currently Indonesia

companies ranks as fifth in term of geographic ranking forcorporate sukuk issuance accounted for 1.7% with total value

USD373 million after corporates from Malaysia, Saudi Arabia,

Singapore, and United Arab Emirates.

Table 1.1. Global Corporate Islamic Bond Ranking by Deal Nationality

Full Year 2012

Rank Deal Nationality Deal Value (USD

million)

No. of issuance % share

1 Malaysia 15,245 73 68.72 United Arab Emirates 3,065 7 13.8

3 Saudi Arabia 2,683 4 12.1

4 Singapore 529 2 2.4

5 Indonesia 373 4 1.7

6 Hongkong 196 2 0.9

7 Japan 91 2 0.4Total 22,182 94 100.0

Sources: www.asiamoney.com


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Sukuk Issued by company is very few. It indicates some points: first, company still under-

estimate with the quality of sukuk in supporting company growth. Second, company still

prefer for using another source of fund to finance their investment activities. Third, very

few study that address some issue how sukuk can contribute significantly to the value ofcompany (capital structure theory)

Figure 4.1. Total SukukOutstanding as April 2013

Sources: International Islamic Financial Statistic (IFIS).Author calculation

Government

/Sovereign

sukuk,7100.61

BUMN

Sukuk,

204.05

Corporate

Sukuk,323.58

Total Sukuk Outstanding (Rp Billion)

ISSUE TYPE SECTOR NO ISSUERTYPE OFSUKUK

AMOUNT (IDRMILLION) %


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ISSUE TYPE SECTOR NO ISSUER SUKUK MILLION) %

Sovereign

Sukuk Government 1 Ministry of Finance

Short Term

Ijara 167.46

Government 2

Perusahaan Penerbit

SBSN Indonesia Al Ijarah 6933.15

TOTAL 7100.61

93.08

%

GovernmentRelated

Entities

(BUM N) Banking/Financial 1 Bank Muamalat Syariah M udharabah 105.95

Telecommunication 2 PT Indosat Al Ijarah 98.1

TOTAL 204.05 2.67%

Corporate Banking/Financial 1 BPD Sulawesi Selatan Mudharabah 11.62

Banking/Financial 2Bank Nagari Sumatera

Barat Mudharabah 10.94

Energy 3 Aneka Gas Industri, PT Al Ijarah 48.23

Retail Manufacturing 4 Matahari Putra Prima Tbk Al Ijarah 12.04

Food Manufacturing 5 Mayora Indah Tbk Mudharabah 48.7

IT 6 Metrodata Electronics Tbk Al Ijarah 9.74

Retail Manufacturing 7 Mitra Adi Perkasa (MAPI) Al Ijarah 4.1

Construction/Property 8

PT Adhi Karya

(PERSERO) Mudharabah 25.93

Car rental/leasing 9

PT Adira Dinamika Multi

Finance Mudharabah 9.58

transportation 10 PT Berlian Laju Tanker Al Ijarah 4.29

Chemical

Manufacturing 11 PT Pupuk Kaltim Timur Al Ijarah 13.88

Water Power

(Utilities) 12 PT Sumberdaya Sewatama Al Ijarah 20.58

Food Manufacturing 13

PT Tiga Pilar Sejahtera

Food Al Ijarah 30.69

Chemical

Manufacturing 14

PT Titan Petrokimia

Nusantara Al Ijarah 22

Food Manufacturing 15 Salim Ivomas Pratama Al Ijarah 29.66

Construction/Property 16 Summarecon Agung, PT Al Ijarah 21.6

TOTAL 323.58 4.24%

GRAND TOTAL 7628.24 100%


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Albeit AAOIFI has issued standards for 14 different types of sukukstructure, namely 1)

Istisnasukuk, 2) Murabahah sukuk, 3) Musharakah sukuk, 4) Mudarabah sukuk, 5)

Wakalahsukuk, 6) Muzaraahsukuk, 7) Musaqahsukuk, 8) Mugharasahsukuk, 9) Salam

sukuk, 10) Sukukof existing services; 11) Sukukof future service, 12) Sukukif existingowned assets, 13) Sukukof existing leased assets, and 14) Sukukof future assets on lease

contract, the common sukukstructure in Indonesia are either ijarahor mudharabah.

Figure 4.4.Corporate SukukStructure

Sources: International Islamic Financial Statistic (IFIS). Author calculation

Al Ijarah

67%

Mudarabah

33%

Corporate Sukuk in Indonesia

by Akad (No. of issuance)


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Requisite of the good Islamic

financial systemGood

Islamic Financial System

Strong Risk

Mana ement

Effective Regulation

Sound Corporate and

Shariah Governance

Supportive legal

frameworkk

Robust Accounting

Disclosure and

Good Educational

System

Active Research in Islamic

Finance

Society awareness

Shariah Advisory


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Problems of Islamic finance

development in Indonesia Human resources Gap

Academicians and Practitioners Gap

Low level of Research and product development in all areas

of Islamic finance (islamic banking, islamic money market,islamic capital market, islamic bond/sukuk, islamic unittrust, takaful, zakat institution, etc.)

Awareness is very critical.

Slow development paradigm. 2014 Challange (General election, OJK as full regulator,

Bank BUMN Syariah, Dana Haji, Bank Wakaf, The fedpolicy etc)


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OJK as RegulatorArgument for regulation

Chapra-Khan theory

Systemic objectives, the protection of depositors, compliancewith syariah, integration of islamic finance in the international

financial systems. DragesTheory

Instability of financial systems, Bank failure.

LlewellynsTheory

Potential systemic problem, the correction of other marketimperfections and failures, the need for monitoring of financialfirm, the need for consumers confidence, potential moralhazard.

Th P li b OJK


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The Policy by OJK Provide a legal, regulatory and supervisory infrastructure.

Islamic financial system

OJK-Shariah advisory council as the highest authority Indonesia international islamic financial centre

Strengthening synergies between financial system

OJK should responsible for increasing the integration of Islamic finance into theinternational finacial system. This is more important due to the AEC 2015.

Human capital development

Establish a research center for shariah and islamic finance which is under OJK. It isvery important to support the rule of OJK to regulate and supervise the financialinstitution especially related to many issue that arises in islamic finance. Inaddition, this institution will develop new product in Islamic finance that mayberelevant and workable in islamic financial institution.

Coordinate with all university which are provide islamic finance education, trainingetc. The role of OJK is to provide the standard curriculum which is relevant theindustries

Establish university in Islamic finance which provide a scholarship.

International body in Islamic Finance (AAOIFI, IFSB, IILM, IIFM)


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OJKDeclare as Islamic Financial Hub

Issue a islamic finance master plan (cover Indonesiatimur)

Coordinationwith all ministry in supporting islamicfinance

Human resource Gap

Product development (bottom-up approach and top-

down approach) and (Fast Line and SAC Line) (goodfor corporate and also for SMEs)

Islamic economic civilization


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Islamic Money Market Instrument Mudharabah interbank investment, Commodity

Murabahah (bursa sukussila)Government InvestmentIssue, Malaysian Islamic Treasury Bills, BNM Notes,

Sukuk BNM, Islamic Negotiable Intrument (BBMakad),Negotiable Islamic Debt Certficate (BBA),Islamic Accepted Bills, Sell and buyback agreement,Cagamas Sukuk.


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Sukuk Sales based (BBA, Murabahah, Salam, Istishna)

Lease-Based (Ijarah, Ijarah Muntahiya bittamlik)

Partnership (Mudharabah and Musyarakah)

Agency based (Wakalah bil istismar)

Issue:

Sukuk Debt or Equity?

Sukuk trading Sukuk pricing

Sukuk Default

Sukuk Rating


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Derivative Product Forward Wad-I Product

Islamic Forex Swap

Islamic Cross Currency Swap Islamic Profit Rate Swap

Islamic Option

Islamic Structured Product


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OJK and Islamic Economics

OJK has an important agenda in realizing Islamic economiccivilization. 3 Pillar in Islamic Economic CiviliztionA. Welfare1. QS Quraisy : 1-4 (indicator: Islamic value system, economic

power in the real sector (industry and trade), basic needsfulfillment and distribution systems, as well as security and

social order.)2. QS Thaha : 124 (Welfare is Shariah based)

3. QS Al-Hasyr : 7 (Distribution of assets)

B. Economic Independence

optimization of the local potential, the quality of human

resources, and Shariah based business culture.C. Sovereignty and Economic Governance (maslahah andmaqosid syariah base)


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Wassalamu Alaikum


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Appendix


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Islamic Money Market Instrument Mudharabah interbank investment, Commodity

Murabahah (bursa sukussila)Government InvestmentIssue, Malaysian Islamic Treasury Bills, BNM Notes,

Sukuk BNM, Islamic Negotiable Intrument (BBMakad),Negotiable Islamic Debt Certficate (BBA),Islamic Accepted Bills, Sell and buyback agreement,Cagamas Sukuk.


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Sukuk Sales based (BBA, Murabahah, Salam, Istishna)

Lease-Based (Ijarah, Ijarah Muntahiya bittamlik)

Partnership (Mudharabah and Musyarakah)

Agency based (Wakalah bil istismar)

Issue:

Sukuk Debt or Equity?

Sukuk trading Sukuk pricing

Sukuk Default

Sukuk Rating


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Derivative Product Forward Wad-I Product

Islamic Forex Swap

Islamic Cross Currency Swap Islamic Profit Rate Swap

Islamic Option

Islamic Structured Product


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Product Development


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Step One : Activity, Industry, & Products Screening

DJIM MSCI Islamic Index S&P Shariah Index FTSE Islamic IndexNon-PermissibleActivities: Negative Screen Excludes:

Non-PermissibleActivities:

Pork Production Alcohol Pork Production Pork Production

Tobacco Tobacco Cloning( Non-Halal

Food Products)Non-Halal Food Products

Alcohol Pork-related

productsAlcohol Beverages Alcohol Beverages

Gaming ConventionalFinancial services

Gambling Gambling

Conventional

Financial ServicesDefense/weapons

Interest based

Financial Institution

Interest based Financial

Institution

Entertainment Gambling PornographyEntertainment(

casinos)

Defense, Weapons Music Arms, Defense Arms, Defense

NonHalal food Hotels Tobacco Tobacco

Activities Contrary

to Islam Cinema

Gold & silver trading as

cash on deferred basis

Activities Contrary to

Islam

Adult

Entertainment

Activities Contrary to

Islam

Step One : Activity, Industry, & Products Screening


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Meezan islamic index Jakarta Shariah index SAC ( S C ) AAOIFI

Non-Permissible

Activities:

Negative Screen Excludes: Non-Permissible Activities:

Interest related Gambling and games

considered as gambling.Financial sevices based on riba

Not to engage in prohibited

business

Gambling

Trading that is

prohibited according to

Shariah

Gambling/Gaming

Alcohol Beverages

Conventional financial

institutions Manufacture and/or sale ofnon halal products

Arms Manufacturing

* Transactions that

contain elements ofbribery (risywah )

tobacco

Insurance both life and

general

products or services that

can deprave ones morals

and are harmful

Conventional

insurance

DefaulterCompanyEntertainment

Non Halal Food

MutualFunds both

open-ended and close

ended

Stockbroking or share tradingin Shariahnon-compliantsecurities


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Step Two : Financial Screening

DJIM MSCI Islamic Index S&P Shariah Index

Liquidity

*Acc Rec/24 Mth Average

Market Cap < 33%

Total Cash + Account

Receivables / Total Assets

< 33.33%

*Acc Rec/ Market value of

equity ( 36 Mth average)

< 49%

*Cash + Int Bearing Sec/24

Mth Average Market Cap.

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