The government aims to sell 1 trillion rupiah ($117 million) of sukuk on May 31 backed by 1,066 infrastructure projects such as roads worth 20.9 trillion rupiah, said Dahlan Siamat, sharia director at the finance ministry. (full story)
The move comes as the parliament has not approved a government request for 30 trillion rupiah of assets to back regular sukuk issues.
"We expect a parliamentary approval for underlying assets. In the mean time, we will issue project-based sukuk," said Siamat, adding project-based sukuk only needed approval from the finance minister.
Project bond issuance could be a new source of funding, as Indonesia's government seeks $100 billion from investors or two-thirds of its infrastructure needs.
There will be two types of project-based sukuk, both with an ijarah structure. The first allows investment in existing projects, and the second invites investors to finance certain projects from scratch.
Poor infrastructure, from bad roads to electricity blackouts, remains an obstacle to foreign investors and the government hopes of achieving an anvestment grade sovereign rating plus 7 percent economic growth by 2014.
The country's sukuk market is lagging behind neighbour Malaysia. Indonesia issued 15.8 trillion rupiah of sukuk in the first quarter, and outstanding foreign ownership was a mere 1.7 percent, latest finance ministry data shows.
This compares with a 32.6 percent foreign owenrship in conventional government bonds.
Siamat said Indonesia still aimed to issue global sukuk in the second half this year, but it would have to wait for the parliament to approve the underlying assets.
Indonesia rescheduled a regular sukuk auction for May 10 as it runs out of underlying assets. ($1 = 8,551 rupiah) (Writing by Aditya Suharmoko; Editing by Neil Chatterjee)
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