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4.4.4 KEY FACTORS UNDERPINNING INDONESIA’S SUKUK MARKET
The development and growth of Indonesia’s sukuk market have been mostly bolstered by
sovereign issuances. On the other hand, the pace of LCY corporate sukuk issuance remains a
challenge which the government and the regulators are trying to address. Therefore, the
government and the regulators are aware of the significance of growing both the sovereign and
corporate bond markets; they have expended the requisite efforts to provide viable stimuli, as
depicted in Figure 4.11. To draw more attention to private sector issuers and boost demand
for sukuk, however, more initiatives and incentives are required.
Figure 4.11: Key Factors Underpinning the Growth of Indonesia’s Sukuk Market
Sources: RAM, ISRA
Indonesia has made strides in developing its sukuk market since Indosat’s (a
telecommunication company) corporate sukuk in 2002. However, Islamic finance in Indonesia
commenced in 1991, with the establishment of Bank Muamalat Indonesia. Figure 4.12
highlights the development phases of Islamic finance in Indonesia, including some insights on
the next stage of advancement.