The Potential of Municipal Sukuk Issuance in Indonesia - A Review of Theoretical Research

Abstract

The main objective of this study is to provide local authorities with municipal Sukuk as an alternative to financing local infrastructure and developing areas. This study reviews the previous literature examining contemporary municipal sukuk and Discussed issues related to restrictions on the issuance of municipal sukuk. The research shows that the barriers to municipal Sukuk issuance are: Regional Barriers, Credit risk, Political Risk, Credit Weakness among stakeholders, Lack of through understanding of Shariah and financing and implementation. It was an exploratory study and aimed to identify barriers to becoming municipal bonds. Blocks of municipal Sukuk are listed from all possible sources. The study proposes some practical ways to overcome the obstacles to the provision of municipal sukuk in order to promote more municipal sukuk in various regions of the country to support sustainable development through equitable infrastructure distribution.

The Effect of Dividends and Capital Gains on Underlying Assets in Green Sukuk

“…For the company, this is an important point that must be used as the main key to attract investors. Meanwhile, for investors with companies that apply capital gains, it is something that needs to be considered to invest (Ulfah, 2023). However, behind large profits also have great risks.…”

“…An underlying Asset is an asset that is used as the basic object of transaction or exchange the issuance of sukuk is one of the main aspects in distinguishing sukuk from conventional bonds where the Underlying Asset is not a guarantee but the underlying asset can be in the form of tangible goods such as state property Land and Building and state property. Underlying itself as an intermediary in sukuk issuance makes it easier to issue sukuk (Noor et al, 2020;Shubita, 2023;Ulfah, 2023).…”

“…The role of green sukuk issuance can affect the distribution of dividends and capital gains on underlying assets owned by private and government companies. The development of green sukuk issuance from year to year has developed and grown as illustrated in gravid as in Figure 1 (Alkamal, 2021;ALFINA, 2022;Ulfah, 2023). Figure 1 shows that the development of green sukuk issuance from 2019 to 2022 has increased and increased transaction growth.…”

“…The existence of concept of Islamic finance or Islamic Finance applied to the Islamic money market and capital market products that can encourage economic development and growth. This is marked by the establishment of various Islamic Financial Institutions, one of which is the form of Islamic financial instruments that have been widely issued by both corporations and the Sukuk state (Purnomo & Zahra, 2022;Ulfah, 2023;Musari, 2022).…”