123
Table 4.13: Indonesia’s Budget Deficits (2014–2017f)
IDR trillion 2014 2015 2016e 2017f
Government revenue 1,550.50 1,508.00 1,555.90 1,750.30
Government expenditure 1,777.20 1,806.50 1,864.30 2,080.50
Budget deficit (226.70) (298.50) (308.40) (330.20)
Source: MOF
Due to the government’s increasing support for the issuance of Shariah-compliant securities,
the percentage of sovereign sukuk to total public debt had climbed up to 16.8% as at end-June
2017, from 0.4% when it was first launched, as shown in Chart 4.35. This ratio is anticipated to
gradually rise in line with Indonesia’s push to develop its ICM.
Chart 4.35: Indonesia’s Sovereign Sukuk vs Conventional Outstanding (2006-June 2017)
0.00
50.00
100.00
150.00
200.00
250.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 June 2017
USD billion
Sukuk outstanding Conventional outstanding
USD82.3
billion
USD223.7
billion
0.4%
16.8%
Sources: MOF, RAM
Based on our data and analysis, we can conclude that the government is earnestly committed
to increasing sovereign sukuk issuance through the years to finance its medium- and long-term
projects, which will eventually lead to the development of this niche market. Nevertheless,
based on the amount of conventional bond issues by the government, the conventional bond
segment is still far bigger than its sukuk counterpart, which indicates that more effort is
required to ensure that sukuk can reach its full potential as a financing and monetary
instrument in the Indonesian market.
Domestic Market – Private Sector Issuance
Based on historical issuances, the growth of the Indonesian LCY corporate bond market has
lagged behind the LCY sovereign bond market, although there was a pick-up in corporate bond
issuance in 2016. The common reasons cited include the following:
1. No major difference in terms of cost compared to bank financing, which is faster.
2. Requirement for issuers to carry investment-grade ratings limits the pool of Indonesian
corporate issuers.