JAKARTA. The Financial Service Authority (OJK) expects tax incentives for sukuk to lift the sharia financial industry from the doldrums given that Indonesia has the world’s largest Muslim population.

OJK's deputy commissioner for stock market supervision, Sardjito, said the Finance Ministry should issue a new regulation on incentives in the near future. Outstanding corporate sukuk in Indonesia are currently worth Rp 9.9 trillion (US$761.5 million), only 3.95 percent of total corporate debt securities.

“We should offer interesting instruments, such as a tax incentive. In London, from what I know, investors often meet government officials to make sure they receive tax incentives,” he said when addressing a seminar on the role of sukuk in infrastructure financing in Jakarta on Wednesday.

Britain is among the first non-Muslim countries to introduce an Islamic financing system. In Indonesia, sukuk development remains sluggish due to a lack of understanding about the sharia-compliant industry and the market infrastructure.

In a bid to make sukuk more attractive, the OJK issued a regulation in 2014 exempting sukuk issuers from registration fees for an issuance worth at least Rp 150 million.

The chairman of CIMB Sekuritas debt syndicate, Anung Rony Hascaryo, has voiced support for the incentives proposal to make sukuk more attractive, adding that he was optimistic that more Indonesian business entities would issue sukuk after incentives were introduced.

“So far, conventional bonds and Sukuk get the same incentives,” he said.

Editor: Barratut Taqiyyah Rafie