Chairman of Indonesia’s Financial Services Authority (OJK), Mr. Mahendra Siregar, welcomed Dr. Sami Al-Suwailem, Acting Director General, of the Islamic Development Bank Institute (IsDBI) (https://IsDBInstitute.org/), at the OJK headquarters in Jakarta, Indonesia, for discussions focusing on the Islamic finance ecosystem.

The meeting, held on 24 October 2023, highlighted IsDBI’s Sukuk Development Program (SDP), which aims to enhance the role of sukuk in supporting development in IsDB Member Countries. The program focuses on three main components, namely Sukuk Enhancement Fund (SEF), Sovereign Finance Corporation (SFC), and Cash Waqf Linked Sukuk (CWLS).

SEF is a mechanism for risk mitigation through reciprocal contributions among sukuk issuers. Sukuk issuers contribute to a pool from which affected members are partially compensated for the risks they endure. The fund, therefore, does not depend on an external guarantee or insurance; the partial protection is fully funded by members’ collective contributions.

Sovereign Finance Corporation (SFC) is an entity dedicated to financing the government’s activities using fixed-income Islamic modes of financing. The SFC acts as a financial intermediary between the government and capital markets and as a reserve builder for future financing of the government.

Cash Waqf Linked Sukuk (CWLS) is cash waqf invested in the sovereign sukuk, whose returns will be channeled into financing social programs and ummah economic empowerment by the waqf manager.

During the meeting, Dr. Sami Al-Suwailem emphasized the need for Shariah-compliant instruments that positively contribute to sustainable development and job creation. Being Sharia-compliant should enhance, rather than compromise, the economic value of the instrument. Dr. Al-Suwailem reiterated the commitment of the Islamic Development Bank to support Islamic finance in Member Countries through collaborative programs.

Mr. Mahendra Siregar welcomed potential partnerships with the IsDB Institute in the area of innovation and economic development. He further welcomed the proposed SDP and noted that such innovative products align with the mandate of the recent Indonesia Omnibus Law that mandated OJK to establish a committee for the development of innovative Islamic financial products.

Mr. Siregar also appreciated the role of the IsDB Institute as the knowledge beacon of the IsDB Group. He urged his team to explore areas of mutual interest beyond the proposed SDP to benefit from the wealth of knowledge and network that the Institute could offer.