Estimation of Potential Domestic Investor Demand for the Issuance of Government Islamic Securities (SBSN) Project Based Participation Fund (Sukuk) and Benefits for Issuers and Investors

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Wulan Indriani; Rifki Ismal; Saiful Anwar. Estimation of Potential Domestic Investor Demand for the Issuance of Government Islamic Securities (SBSN) Project Based Participation Fund (Sukuk) and Benefits for Issuers and Investors

Page : 55 Research.

Estimation of Potential Domestic Investor Demand for the Issuance of Government Islamic Securities (SBSN)

Project Based Participation Fund (Sukuk) and Benefits for Issuers and Investors

Wulan Indriani^1*), Rifki Ismal²⁾, Saiful Anwar³⁾

Tazkia Institute, Bogor, Indonesia,

1*) windriani1102@gmail.com,,²⁾ rifki_ismal@yahoo.com, ³⁾syaifulanwar20183@gmail.com

corresponding author^*)

Received: February 5 ,2022; Accepted: June 5 ,2022 Published: June 30, 2022

To cite this article: Indriani, W. Ismal, R. Anwar, S.(2022). Estimation of Potential Domestic Investor Demand for the Issuance of Government Islamic Securities (SBSN) Project Based Participation Fund (Sukuk) and Benefits for Issuers and Investors. The Accounting Journal of BINANIAGA. 7 (1) 55 - 70 doi: 10.33062/ajb.v7i1.493

ABSTRACT. SBSN PBS is one of Islamic securities issued by the government since 2012. It has a special puIDRose to finance the infrastructure development in Indonesia.

Because of the incremental of Islamic finance industry, it has affected the increasing of the demand for SBSN PBS each year. Therefore, this research intends to determine the potential demand of them, how to fulfil such a demand and the benefits for both the issuer and the investors. The thesis uses qualitative and quantitative approaches to determine the market’s view, analyze the prognosis of its supply and demand with least square method, and the benefits that will be obtained from the issuance of SBSN PBS. The results of the r indicate that the growth of SBSN PBS issuance is estimated has a positive trend with CAGR 6.7% over the next 5 years. Besides, its demand has also had a high potential absoIDRtion. The growth is estimated to be CAGR 9.6% with a bid to cover ratio 3 times until 4 times higher than its supplies. Therefore, with the good market response, the government needs to consider; (i) the total proceeding value of SBSN PBS issuance, (ii) increasing the frequency of auctions, (iii) and prioritizing SBSN PBS than others.

Keywords: SBSN Project Based Sukuk, Market Potential, Islamic Finance INTRODUCTION

State sukuk is a sharia financial instrument that is growing and is in great demand by investment players both domestically and internationally. In Indonesia, state sukuk or known as SBSN (State Sharia Securities) have been regulated in Law no. 19 of 2008 concerning SBSN. Since then, SBSN has become an alternative to sharia-based financing which is one of the supporters of APBN funding sources in Indonesia. The Directorate General of Debt Management – Ministry of Finance has explained that, apart from being an alternative source of APBN financing, the issuance of SBSN also aims to;

(1) Expanding the source base of state budget financing; (2) Encouraging the development of the Islamic financial market; (3) Creating benchmarks in the Islamic financial market; (4) Diversification of the investor base; (5) Developing alternative investment instruments; (6) Optimizing the utilization of State Property; and (7) Utilizing public funds that have not been captured by the conventional banking system

In order to support the development of sustainable projects in Indonesia, the Ministry of Finance has innovated by issuing project-based SBSN, namely project financing that is used to finance infrastructure projects on an earmarked basis. Project- based SBSN or known as SBSN- Project Based Sukuk can provide benefits in financing strategic national development more independently, and optimizing the use of financing funds for more productive capital expenditures/investments. One way that the

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government can do to support the infrastructure budget needs is to involve active contributions from the community through the issuance of National Sharia Securities (SBSN). Since its launch in 2012, The SBSN Project Based Sukuk has succeeded in funding the Ministry of Transportation project, namely the construction of the Cirebon- Kroya Railway (Double Track) worth IDR 800 billion.

Although the total issuance of project-based SBSN has continued to increase since 2013, its contribution to infrastructure funding is still relatively small, which is only around 5-7% of the total infrastructure budget. In addition, in 2020 the SBSN issuance target also experienced a decrease of 4% compared to the previous period.

Indonesia is a country with the largest Muslim population in the world. Therefore, Indonesia has enormous potential, especially in the field of Islamic economics to support national development. SBSN is one of the Islamic financial instruments that is growing quite rapidly and is able to bring in investors both from within and outside the country.

Seeing the large opportunity for SBSN to bring in domestic and global investors as an alternative to financing national infrastructure development, then the question that arises is how big is the potential for SBSN-project based sukuk that the government can issue to meet SBSN demand in the market while increasing the market share of Islamic bonds in Indonesia. Indonesia.

The purpose of this research is to determine the potential magnitude of investor demand for SBSN Project Based Sukuk and the factors that influence investors' decisions to invest in Project Based Sukuk SBSN, to analyze the nominal projections of SBSN Project Based Sukuk that can be issued taking into account the far-reaching demand.

greater than the offer of SBSN- Project Based Sukuk (Oversubscribed), provides a strategy that can be recommended to close the gap in demand and supply for SBSN Project Based Sukuk, knowing the benefits of issuing SBSN- Project Based Sukuk for both issuers and investors

Formulation of the Problem

Investor demand for SBSN Project Based Sukuk is very high and cannot be fulfilled by the issuance of sufficient SBSN Project Based Sukuk by the government. To be able to measure the potential of SBSN that should be issued by the government in the context of alternative funding sources by considering the market potential which is quite large both from the conventional and sharia sides, the research questions of this thesis are:

1. Apa saja manfaat penerbitan SBSN- Project Based Sukuk baik bagi penerbit maupun investor?

2. How big is the potential investor demand for SBSN- Project Based Sukuk?

3. What is the projected nominal nominal of SBSN- Project Based Sukuk that can be issued taking into account the demand which is much larger than the supply of SBSN- Project Based Sukuk (Oversubscribed)?

4. What are the benefits of issuing SBSN- Project Based Sukuk for both issuers and investors?

LITERATURE REVIEW

SBSN Project Based Sukuk adalah salah satu sukuk negara yang telah diatur dalam Undang- Undang No. 19 Tahun 2008, yaitu Surat Berharga Negara yang diterbitkan berdasarkan prinsip syariah, sebagai bukti atas bagian penyertaan terhadap aset SBSN, baik dalam mata uang rupiah maupun valuta asing. Berdasarkan undang- undang tersebut, penerbitan SBSN bertujuan untuk pembiayaan defisit APBN dan pembiayaan proyek infrastruktur milik pemerintah. Dengan demikian Project Based Sukuk adalah salah satu inovasi surat berharga syariah negara yang secara khusus diterbitkan pembagunan proyek/ infrastuktur negara sebagai asset yang mendasarinya.

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Page : 57 SBSN Project Based Sukuk pertama kali diterbitkan pada tahun 2012. Jenis sukuk ini menggunakan akad Ijara Asset to be Leased, yaitu suatu akad dimana pemerintah memungkinkan untuk menyewa aset (proyek infrastruktur) yang akan dibangun di masa depan (sesuai dengan masa/ waktu konstruksi) dan pemerintah akan membayar uang sewa atas proyek tersebut selama masa konstruksi. Atas dasar tersebut, investor SBSN PBS (pemegang sukuk) akan mendapatkan imbalan dari nilai sewa yang telah disepakati. Imbalan atau uang sewa yang diperoleh investor bersifat tetap (fixed return) dan dikenal dengan istilah ujrah. Berdasarkan jenisnya, Project Based Sukuk terbagi menjadi dua, diantaranya

SBSN Project Based Sukuk is one of the State Sukuk which has been regulated in Law no. 19 of 2008, namely Government Securities issued according to sharia principles, as evidence of the share of participation in SBSN assets, both in rupiah and foreign currencies. According to the law, the issuance of SBSN is aimed at financing the APBN deficit and financing government-owned infrastructure projects. Thus, Project Based Sukuk is one of the innovations of state Islamic securities which is specifically issued for the construction of projects/state infrastructure as the underlying asset.

The SBSN Project Based Sukuk was first issued in 2012. This type of sukuk uses the Ijara Asset to be Leased contract, which is a contract where the government allows it to lease assets (infrastructure projects) to be built in the future (according to the construction period/time) and the government will pay rent for the project during the construction period. On this basis, SBSN PBS investors (sukuk holders) will receive compensation from the agreed rental value. The return or rent earned by investors is fixed (fixed return) and is known as ujrah. According to the type, Project Based Sukuk are divided into two, including:

1. Project Underlying Sukuk

Issuance of sukuk using infrastructure projects that have been listed in the APBN document as the basis for the transaction. Thus, the proceeds of the issuance of State Sukuk (proceeds) are used to replace the funds that have been issued (revolving). So that for the type of project financed by this mechanism, the project is firstly financed with state revenue sourced from taxes, non-tax income, and so on, then the costs are replaced from the results of the SBSN-PBS issuance.

2. Project Financing Sukuk (PFS)

Issuance of sukuk according to infrastructure projects proposed by Ministries/Institutions through the project submission process according to the APBN mechanism, namely through the National Development Planning Agency (Bappenas) and proposed to the Ministry of Finance to be budgeted in the APBN.

This infrastructure project will be financed by the issuance of PBS after the project is listed in the APBN document, so that the overall funding source is financed by PBS (earmarked).

To find out how the mechanism for issuing SBSN by the state and the returns received by investors on SBSN ownership can be seen in the SBSN Rent (Ijara) Asset to be Leased scheme as follows:

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Figure 1. SBSN Ijara Scheme Asset to be Leased Source: Ministry of Finance

Description:

A. Issuance of SBSN

1. Order of Ijara Objects with certain specifications by the Government to SBSN Issuing Companies (PP SBSN) for lease through an Asset to be Leased Ijara contract.

2. Authorization & Asset Purchase

a. The granting of authority (Wakalah Agreement) by PP SBSN to the Government in the context of project development which will be used as the object of Ijara.

b. Purchase (Akad Bai') land and/or buildings in the form of State Property which will be used as part of the object of Ijara (if necessary).

3. Issuance of SBSN by PP SBSN as evidence of investor participation in SBSN Assets.

4. he proceeds from the issuance of SBSN (Proceeds) from investors to PP SBSN.

5. Proceeds from PP SBSN (Proxy) to the Government (Vice).

B. Payment of SBSN Fees

6. Asset to be Leased Ijara contract between the Government (Tenant) and PP SBSN (Lease).

7. Payment of rent (ujrah) periodically by the Government to PP SBSN, to be given to investors in return for SBSN.

8. Periodic payment of SBSN rewards to investors through Paying Agents.

4. Proceeds

12.

Pelunas an SBSN 8.

Paymen t SBSN Reward s

Investors

3. Penerbitan SBSN

SPV

A. Publisher B. Trustee C. Endorser D. Endorsee

- Tenant

- Buyer

Representa tive/Proxy

1. Pemesanan objek ijara

6. Ijara Asset to be Leased

7. Payment of rent (ujrah)

10. Purchase of SBSN Assets at maturity (akad ba’i)

11. SBSN Asset Payment

2a. Granting power of authority (Akad Wakalah) for project development 2b. Akad Ba'i on state

property

5. Proceeds

9. BAST Project

Project Development

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Page : 59 9. The signing of the Minutes of Handover (BAST) of the project between the

Government (representative) and PP SBSN (the Authorizer).

C. Maturity of SBSN

10. Purchase of SBSN Assets by the Government from SBSN holders through SBSN Issuing Companies (Akad Bai') at maturity.

11. Payment for the purchase of SBSN Assets by the Government to SBSN holders through a Paying Agent as payment for SBSN.

12. Maturity and Repayment of SBSN.

The purpose of issuing SBSN PBS according to the law is to finance the APBN as well as government projects. SBSN has become a promising alternative source of infrastructure funding. There are several advantages and benefits that can be obtained from the issuance of SBSN, namely:

1. Increasing independence in financing national development

2. Support the acceleration of the development of infrastructure projects and other strategic projects

3. Optimizing the use of financing funds for capital expenditure/investment

4. Providing opportunities for the community to participate in financing the development of government projects.

Since 2013, the government has developed SBSN which is directly allocated for financing infrastructure projects on an earmarked basis, which is often referred to as Project Financing Sukuk. Total Project Financing Sukuk in 2013-2020 is estimated to reach IDR 118.26 trillion with a total of 2,939 projects in 8 Ministries/Agencies and spread across 34 provinces. The following is the budget allocation for the Sukuk Financing Project that has been implemented from 2013 to 2019:

2013 IDR 800 Billion

1. Ministry of Transportation (IDR 800 Billion)

 Construction of the Cirebon-Kroya Railway (Double Track).

2014 IDR 1.57 Trillion

1. 1. Ministry of Transportation (IDR 1.37 Trillion)

 Construction of the Cirebon-Kroya Double Track (Continued), Mangarai- Jatinegara Double Track (Package A) & Jatinegara-Bekasi Double Track (Package B2)

2. Ministry of Religion (IDR 200 Milyar)

 Revitalization and development of Hajj hostels (4 embarkations; Medan, Padang, Jakarta & Balikpapan)

1. Ministry of Transportation (IDR 2.92 Triliun)

 Construction of the Medan-Kualanamu Elevated Track, Martapura-Baturaja &

Cirebon-Kroya segment III railway lines, Mangarai-Jatinegara railway facilities (Package A) and Jatinegara-Bekasi (Package B2).

2. Minister for Public Works and Human Settlements (IDR 3.51 Trillion)

 Road & Bridge Construction (Sumatra, Java, NTB, Kalimantan, Sulawesi, Maluku and Papua)

3. Ministry of Religion (IDR 675 Milyar)

 Revitalization and development of Hajj hostels (8 embarkations)

 Construction/Rehabilitation of Marriage Halls and Hajj rituals (19 Office of Religious Affairs)

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 Construction of buildings, facilities and facilities for state Islamic religious colleges (7 PTKIN).

1. 1. Ministry of Transportation (IDR 4.99 Trillion)

 Construction of Elevated and Double Track railway lines (Jabodetabek, Central Java, East Java, Sumatra)

2. Minister For Public Works and Human Settlements (IDR 7.23 Trillion)

 Construction of underpasses, flyovers, tunnels and bridges (Sumatra, Java, NTB, Kalimantan, Sulawesi, Maluku and Papua)

3. Ministry of Religion (1.47 Triliun)

1. Ministry of Transportation (IDR 7.54 Trillion)

 Construction of Elevated and Double Track railway lines (Jabodetabek, Central Java, East Java, Sumatra and Sulawesi)

 Construction of underpasses, flyovers, tunnels and bridges (Sumatra, Java, NTB, Kalimantan, Sulawesi, Maluku and Papua).

 Control of floods, lahars, management of urban main drainage, and coastal protection, management of dams, reservoirs, and other water storage structures, supply and management of raw water.

3. Ministry of Religion (1.79 Trillion)

 Revitalization and development of Hajj hostel (11 embarkations).

 Construction/Rehabilitation of Marriage Halls and Hajj rituals (256 Office of Religious Affairs).

1. Ministry of Transportation (IDR 7.00 Trillion)

 Construction of Elevated and Double Track railway lines (Jabodetabek, Central Java, East Java, Sumatra and Sulawesi).

 Construction of underpasses, flyovers, tunnels and bridges (Sumatra, Java, NTB, Kalimantan, Sulawesi, Maluku and Papua)

 Control of floods, lahars, management of urban main drainage, and coastal protection, management of dams, reservoirs, and other water storage structures, supply and management of raw water

3. Ministry of Religion (1.79 Trillion)

 Construction of buildings, facilities and facilities for state Islamic religious colleges (34 PTKIN and 32 Madrasah).

4. Ministry of Environment and Forestry (IDR 51 Billion)

 Construction of 3 National Parks

5. Ministry of Research and Technology (IDR 315 Billion)

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 2 Universities building development

6. National Standarization Agency (BSN) (IDR 50 Billion)

 Development of 1 laboratory

7. Indonesian Institute of Sciences (LIPI) (IDR 120 Billion)

 Construction of 2 laboratories

And in 2019, the Ministry of Finance managed to finance projects using SBSN worth IDR 28.43 Trillion covering 619 projects in 34 provinces throughout Indonesia. The main sectors financed by 14 sectors include railways, roads and bridges, water resources infrastructure, hajj dormitories, state university buildings; marriage hall and pilgrimage rituals, madrasas; environmental & forestry infrastructure, and laboratories.

In general, the state sukuk is a sharia financial instrument which in the last ten years has attracted many domestic and international enthusiasts and has become an alternative source of state financing. After the enactment of the 2008 SBSN Law, the government succeeded in issuing IDR 15 trillion sukuk to become a source of financing the budget deficit in the 2008 APBN. And in 2020, DJPPR reported that until January 16, 2020, the issuance of State Sharia Securities (SBSN) had reached IDR 1,230.44 trillion with an outstanding of IDR 738.37 trillion. The drastic increase in issuance in the last 10 years indicates that the market is very responsive to the issuance of sukuk, almost all types of state sukuk issued were completely absorbed by the market, even to the point of being oversubscribed or oversubscribed.

In line with the positive market response to the issuance of SBSN, in 2012 the government issued PBS series state sukuk aimed at focusing on financing infrastructure projects. Since the beginning of its issuance, the potential for financing generated from SBSN-project based sukuk is very large. This is indicated by the nominal growth of issuance that occurs every year which also indicates an increase in investor interest in the PBS series of state sukuk offerings

Previous research has discussed the high increase in SBSN issuance, including the type of Project Based Sukuk SBSN. Kurniawan and Rahman (2019), explained that the issuance of PBS sukuk has shown significant growth. This is indicated by the PBS sukuk budget which is increasing from year to year in line with the increasing interest of investors in sharia-based instruments. This phenomenon also shows that Islamic economics has an important role in helping the government, especially in the field of infrastructure development. Amaliah and Aspiranti (2017), SBSN is one of the financial instruments that has an important role in supporting national financing through real sector growth. The issuance of state sukuk has provided an alternative funding to support Indonesia's ongoing economic development. Meanwhile, research conducted by Pratiwi et al (2017) explains that sukuk have played an important role for infrastructure development in Indonesia. So it is hoped that the government can maximize the potential of sukuk as an alternative to infrastructure financing and begin to reduce dependence on foreign debt in infrastructure financing. Ease of access for both domestic and foreign investors to invest in sukuk will be an added value in attracting investors. So, it is hoped that the government can maximize the potential of sukuk as an alternative to infrastructure financing and begin to reduce dependence on foreign debt in infrastructure financing. Ease of access for both domestic and foreign investors to invest in sukuk will be an added value in attracting investors. So, it is hoped that the government can maximize the potential of sukuk as an alternative to infrastructure financing and begin to reduce dependence on foreign debt in infrastructure financing. Ease of access for both domestic and foreign investors to invest in sukuk will be an added value in attracting investors.

In addition, the international community is also increasingly aware of the economic and strategic opportunities that can be created by issuing sukuk. As is the case in Nigeria, along with conventional bonds, the issuance of sukuk has become an alternative

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instrument as a source of funding to fulfill Nigerian government programs (Abdullah, 2013). The same thing has also been widely used by Malaysia where Islamic bonds have become a very effective tool in financing the budget deficit in Malaysia (Naufal & Suharti, 2021).

RESEARCH METHODS

In this research, the method used is descriptive qualitative-quantitative. To measure the potential of SBSN Project Based Sukuk in the future, researchers will use a forecasting technique approach with the Least Square Method. The data used to project potential issuance (offers) and incoming bids from SBSN Project Based Sukuk are data on SBSN Project Based Sukuk issuance in 2012-2020 and market demand data (incoming bids) in 2015-2020. In addition, this research also uses qualitative data derived from literacy reviews to find out what benefits can be obtained from the issuance of SBSN PBS both from the investors and publishers side. Therefore, the research will get a discussion and conclusions that are described in detail and comprehensively.

.

RESULTS AND DISCUSSION

Development of Project Based Sukuk SBSN Issuance and Its Growth Potential The role of state sukuk as one of the instruments for financing the state budget has been taken into account in the last decade. Since the first issuance in 2008, the nominal outstanding SBSN has always increased every year. The total issuance of SBSN as of December 31, 2019 reached IDR1,230.44 trillion, with a total outstanding SBSN reaching IDR740.62 trillion or 18% of the total outstanding Government Securities.

Figure 2. Market Share of State Sukuk

Source: Financial Services Authority

In line with the increase in the number of SBSN issuances which have an average annual growth rate of 44% over the 11 years since 2008, PBS SBSN types have also experienced a significant increase in the last 5 years. In 2020, the realization of the issuance of SBSN PBS series reached IDR 197.5 trillion, an increase of 40% from 2019 with a total issuance of IDR 141.5 trillion. When compared with the initial issuance of SBSN-PBS in 2012 with a nominal issuance of 16.7 trillion, it can be seen that the average growth rate over the last 8 years has reached 36% with an average issuance of IDR75.4 trillion per year.

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Page : 63 (IDR Trillion)

Figure 3. Development of 2012-2020 SBSN-PBS Issuance (IDR Trillion) Source: Ministry of Finance

According to the total issuance of PBS SBSN in the primary market in 2012-2020, the projected calculation of PBS Sukuk issuance will use this historical data as the basis for the estimation of total issuance in the next 5 (five) years. The projection of the issuance of SBSN PBS will use a trend liner with the Least Square Method. From the data, the trend equation will then be determined according to the least squares method to project the potential for SBSN-PBS issuance in the next five (5) years.

So that the potential growth in the issuance of SBSN PBS if depicted in a graph is as follows:

Table 1.

Projected Value of PBS Sukuk Issuance in 2021-2025 (IDR Trillion)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

17 9 8 42 88 90 85 141 197 185 207 229 251 273

Aktual (Rp Triliun) Proyeksi (Rp Triliun)

(IDR Trillion)

Table 1. Figure 4. Projected Issuance of SBSN PBS 2021-2025

According to the graph above, it can be seen that the projected issuance of PBS Sukuk has a positive trend with an average growth of 6.7% annually for the next five (5)

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years. By using the least square method, it can be estimated that the issuance of SBSN PBS in 2021 will be around IDR 185 trillion and IDR 273 trillion in 2025. This situation will occur if the Indonesian government is committed to allocating a budget for the issuance of PBS Sukuk in a sustainable manner accompanied by a planned infrastructure development part of the funding comes from the issuance of SBSN PBS.

Development of Demand (Incoming Bids) SBSN Project Based Sukuk and Its Growth Potential

The growth in the issuance of SBSN PBS by the government is also accompanied by the enthusiasm of investors to own these securities. In the last five years, the number of requests for SBSN PBS has always been oversubscribed or the demand has always exceeded the amount supplied. The following is a graph that illustrates the amount of market demand for the supply of SBSN PBS.

(IDR Trillion)

Figure 5. Bid to Cover Ratio PBS Series issued through the auction method Source: Ministry of Finance Director General of Financing and Risk Management

According to these data, we can calculate that the average annual growth (CAGR) of PBS SBSN demand by investors over a period of 5 (five) years is 48.3%. Meanwhile in 2020 demand growth reached 96.5% YoY where in 2020 is the highest amount of demand with a nominal value of IDR 667 Trillion.

(IDR Trillion)

Figure 6. Bidders' Requests for 2015-2020 PBS SBSN Source: Ministry of Finance

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Page : 65 Seeing the very high potential and enthusiasm of investors for the demand for SBSN PBS, it is a separate opportunity for SBSN PBS issuers to be able to increase infrastructure financing plans sourced from SBSN PBS. From historical data on the development of investor demand for SBSN PBS over the last five years, it can be used as a basis for researchers to calculate the prognosis for growth in demand for SBSN as a potential issuer to consider to close the gap between the needs of SBSN PBS instruments in the primary market.

Table 2

PBS Sukuk Market Demand Projected Value in 2021-2025

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

191 227 130 339 667 630 736 842 948 1054

Aktual (Rp Triliun) Proyeksi (Rp Triliun)

(IDR Trillion)

Figure 7. Projected Demand for SBSN PBS by Investors 2021-2025 (IDR Trillion)

By using the least square method, researchers have projected that the number of investor requests for SBSN PBS will continue to increase with an average annual growth of 9.6% for the next 5 (five) years where in 2021 it is estimated that demand will reach IDR 630 Trillion and IDR 1.054 Trillion in 2021. 2025.

When compared with the estimated offer for the issuance of SBSN PBS in 2021- 2025, there will be a gap where the number of requests will be 3x to 4x higher than the projected supply. This can be illustrated in a graph as follows.

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Figure 8. Estimated Bid to Cover Ratio for SBSN PBS in 2021-2025 Table 3

Estimated Comparison of Demand and Supply of SBSN PBS in 2021-2025

2018 2019 2020 2021 2022 2023 2024 2025

Permintaan (Rp T) 130 339 667 630 736 842 948 1054

Penawaran (Rp T) 85 141 197 185 207 229 251 273

Selisih (Gap) (Rp T) 45 198 469 444 528 613 697 781

Bid to Cover Ratio 1.5 2.4 3.4 3.4 3.5 3.7 3.8 3.9

Aktual Proyeksi

Tahun

Taking into account the large gap between supply and demand, this becomes a potential as well as an opportunity that can be utilized by the government to increase the space for infrastructure financing that is sourced from SBSN PBS. This shows that the SBSN PBS still has the potential for a fairly large increase considering that investor interest in SBSN PBS is high enough to absorb one of these sharia investment instruments. Therefore, to close or narrow the gap, here are some strategies that the government as the issuer can do to meet market demand for SBSN PBS:

1. Menambah porsi pembiayaan infrastruktur yang bersumber pada SBSN PBS minimal 3 kali sampai 4 kali dari nilai penerbitan saat ini.

2. Meningkatkan frekuensi lelang SBSN PBS di tiap tahunnya menjadi 36 sampai 48 kali lelang per tahun

3. Mempriortaskan SBSN PBS daripada jenis SBSN lainnya untuk mendanai pembangunan infrastruktur di Indonesia karena nilai penerbitan dan tenor SBSN PBS cenderung lebih tinggi SBSN lainnya.

4. Increase the portion of infrastructure financing sourced from SBSN PBS at least 3 to 4 times the current issuance value.

5. Increase the frequency of PBS SBSN auctions annually to 36 to 48 auctions per year

6. Prioritize PBS SBSN over other types of SBSN to fund infrastructure development in Indonesia because the issuance value and tenor of PBS SBSN tend to be higher than other SBSNs.

Benefits of Issuing SBSN Project Based Sukuk A. Benefits from the Publisher's Side

The following are the benefits and strategic roles that can be created from the issuance of SBSN, especially Project Based Sukuk (PBS).

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Page : 67 1. Encouraging the Growth of the National Islamic Finance Industry

The availability of SBSN PBS can provide benefits in regulating or managing liquidity in the market. With the existence of SBSN instruments, especially PBS that can be traded, it can be one of the instruments that can be used to absorb excess liquidity in the financial industry. So that with the large demand in the market this will encourage increased growth of the national Islamic finance industry.

2. Increasing the Portion of State Budget Infrastructure Financing

The issuance of SBSN PBS using underlying assets in the form of infrastructure projects has caused an increase in the fiscal space of the APBN. The financing for infrastructure development which is in the state expenditure post is partially relocated to the financing post. This has an impact on increasing space in state expenditure posts that can be used for other infrastructure needs.

3. Encouraging Orderly Management of Government Infrastructure Projects

The issuance of SBSN PBS will only be issued when the government has decided on the Ministry/Agency infrastructure development project plan. This is because SBSN PBS requires a project basis or underlying asset which is the main requirement for the SBSN PBS instrument to be issued. So that with these provisions, the completion of a project in accordance with the planned time has become part of the sharia requirements or provisions as stipulated in the contract structure used.

B. Benefits from the Investor's Side

The benefits obtained from the investor side of the issuance of SBSN PBS include:

1. Alternative Instruments in Managing Company Liquidity

One of the instruments that can be used to maintain bank liquidity is SBSN PBS, because SBSN can not only be held to maturity (Hold to Maturity) whose tenor is adjusted to the company's funding needs, but can also be traded on the secondary market when the company needs funds at any time. SBSN PBS tenor is complete.

2. Adding Alternative Investment Instruments

SBSN PBS is not only useful in managing company liquidity, but also can be used as an alternative investment instrument with the expectation of a return that has been regulated and guaranteed in the State Budget Act. Besides the returns guaranteed by law, SBSN PBS is a fairly safe investment instrument because it is issued by the government through the Ministry of Finance. In other words, SBSN PBS is an investment instrument that is risk free from default. The principal payment of the investment and the yield to be paid to investors (the owners of SBSN PBS) have been regulated and budgeted in the APBN. So that investors can feel safe and get definite returns by investing in SBSN PBS.

3. Able to Contribute to the National Development Process

As regulated in Law no. 19 of 2008, with the issuance of SBSN PBS, it can provide broad opportunities for the public, especially SBSN PBS auction participants to contribute actively in financing national infrastructure by having SBSN issued by the government.

CONCLUSIONS AND SUGGESTIONS

According to the analysis and discussion that has been conducted, the following conclusions can be drawn: The growth of the issuance of SBSN PBS in the last 9 (nine) years has an average increase per year which is quite significant, namely 36% per year. If viewed from the historical data for the issuance of SBSN PBS for 2012-2020, the potential growth for the issuance of SBSN PBS will continue to increase with an average growth of 6.7% annually for the next five (5) years. In line with the projected increase in the

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issuance of SBSN PBS, the number of investor requests for SBSN PBS also increases with an average annual growth of 9.6% until 2025. Given the large gap between supply and demand,

The benefits that can be obtained from the issuance of SBSN PBS from the publisher (government) side include; (i) encourage the growth of the national Islamic finance industry, (ii) increase the portion of state budget infrastructure financing, (iii) encourage orderly management of government infrastructure projects. Meanwhile, the benefits that can be obtained from the issuance of SBSN PBS from the investor side include; (i) alternative instruments in managing company liquidity, (ii) adding alternative investment instruments (iii) able to contribute to the national development process.

Seeing the growth trend of SBSN PBS issuance which is quite significant in the last 10 (ten years), it is recommended that the government consider the growth rate of SBSN absorption in the market in determining the portion of issuance accompanied by the readiness of infrastructure projects that can be financed by SBSN Project Based Sukuk.

Thus, the government can increase state expenditure posts which are directly proportional to the increase in the number of infrastructure development projects that can be financed by SBSN PBS.

SBSN Project Based Sukuk is an investment instrument as well as a sharia financial instrument that is quite safe and provides good returns as an investment instrument. With the characteristics of SBSN Project Based Sukuk that can be traded on the secondary market, it will be very easy for the company if it needs a certain amount of funds to meet its liquidity needs. Therefore, the allocation of special funds intended for the purchase of SBSN Project Based Sukuk is highly recommended, because in addition to being an instrument for managing company liquidity, it can also be used as a very safe and profitable investment tool. In addition, by absorbing a number of SBSN Project Based Sukuk issued by the government, investors can participate in the process of developing the market share of the Islamic finance industry and contribute to infrastructure financing efforts in Indonesia.

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