Photo for illustrative purposes. A man getting his eyes checked at Cicendo Eye Center and Hospital at Bandung, West Java, Indonesia in January, 2017. Sony Herdiana /

Islamic Finance

Indonesia to issue waqf-linked sukuk for West Java hospital facility

JAKARTA - Indonesia’s government will issue a waqf-linked sukuk to finance a facility at a hospital in West Java, Imam Teguh Saptono, vice chairman of Badan Wakaf Indonesia told Salaam Gateway.

The sukuk will be issued in the fourth quarter at the earliest, with an indicative amount of 20 billion Indonesian rupiah ($1.4 million) to 50 billion rupiah.

Cash waqf is a form of trust fund set up with money to primarily support charity services. The upcoming cash waqf-linked sukuk will benefit the Ahmad Wardi Eye Hospital retina center facility.

The sukuk is similar to the one issued in 2018 to benefit the construction of affordable homes for victims of earthquakes in Lombok and Palu, said the official of the country’s waqf board.

The paper will have a five-year tenure and profit rate of around 8 percent.

However, unlike the affordable homes sukuk, it will be issued in three to six tranches by the ministry of finance, in line with the 11 billion rupiah financing needs of the hospital unit.

“The sukuk will be divided into two types of investors: under 5 million rupiah or temporary cash waqf (for participants who seek returns on their contribution) and 5 million rupiah and above or perpetual cash waqf (for participants seeking non-refundable donations),” said Imam.

“Other than institutional investors, we also aim for retail investors such as preferred customers of Islamic banks, employees of state-owned enterprises and so on,” he added.

He said the government allows these types of sukuk to be issued anytime.

The government started a system since its 2017 state budget to allow Islamic financing schemes to finance listed projects.

The projects are not limited to infrastructure but can also include social and environmental ones such as education scholarships, and those benefiting mosque managers.

Cash waqf managed by the national board has not increased very much at all since last year, and currently stands at around only 199 billion rupiah.

According to Imam, there is a large amount of unrecorded cash waqf in Indonesia where only 200 of 30,000 waqf managers are registered.


The United Nations Development Programme (UNDP) office in Indonesia and Badan Wakaf Indonesia launched their waqf blockchain initiative in April 2018, according to UNDP Indonesia’s national project manager Muhammad Didi Hardiana. was developed to help fill the gaps in the financing of the Sustainable Development Goals (SDGs).

The digital platform stores data and can also be used for storing other information as well as processing transactions. It currently manages 192.6 million rupiah for eight SDG programmes in Indonesia.

Badan Wakaf Indonesia also currently uses a national waqf database developed jointly with the central bank.

“It’s called Sistem Informasi Wakaf and it records data from all aspects of waqf, including collection, management as well as distribution, from participants to beneficiaries,” said Imam.

He said blockchain could improve transparency and traceability for the national waqf database platform.

($1 = 14,022 Indonesian rupiah)

(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim

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Islamic social finance
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Yosi Winosa