IMPERIUMDAILY.COM-JAKARTA – The Indonesian government for the first time issued retail Sharia Government Securities (SBSN) for funding environmentally friendly projects, 1 November 2019.
In the business world it is known as the Green Sukuk Savings series 006 (ST006). Green Sukuk ST006 is the first retail green sukuk in the world. It is called retail because sukuk is sold to individuals in the general public. In March 2018, Indonesia released Global Green Sukuk for the world market.
Sukuk is a term in Arabic, refer to bonds in accordance with sharia principles. The word green is embedded because the money obtained from retail investors (individuals) from the debt, is used to pay environmentally friendly projects.
Reporting from the Directorate General of Financing and Risk Management of the Ministry of Finance, environmentally friendly projects include renewable energy generation, research and development of energy-efficient products.
There are also projects to strengthen and reduce risk in areas prone to disasters, environmentally friendly transportation, projects to use waste to energy and waste management. Also environmentally friendly tourist sites, building environmentally friendly buildings. Including sustainable agribusiness.
Green Sukuk ST006 is very profitable for investors. Because the ST006 yield coupon is set by the government at a minimum of 6.75 percent (gross) per year.
Referring to the Kemenkeu (Ministry of Finance) release of ST006, the coupon (profit) yield of ST006 has a spread of 1.75 percent or 175 basis points (bps), compared to the Bank Indonesia benchmark interest rate, the BI 7 Days Reverse Repo Rate (7DRRR) at the 5 percent level. A value of 1 percent is equal to 100 basis points.
The simulation, if the BI reference rate (7DRRR) is at 5.5 percent, the yield coupon of 5.5 + 1.75 becomes 7.25 percent. Conversely, if the BI reference rate (7DRRR) fall by 4.5 percent, the yield coupon is not 6.25 (4.5 + 1.75), but instead applies a minimum coupon of 6.75 percent.
The coupon will be distributed to investors every month, on the 10th of every month. For the first period, paid on January 10, 2020 and February 10, 2020, a coupon of 6.75 percent applies.
Reporting from CNBC Indonesia, another advantage of ST006 is the tax deduction imposed on a 15 percent sukuk coupon. The tax value is still smaller than the deposit tax at 20 percent.
The public can buy Green Sukuk ST006 at 23 distribution partners. It consists of 12 commercial banks, three Islamic banks, three securities, three mutual fund sellers, and two peer to peer lending (P2P) fintechs.
The offer period for Green Sukuk ST006 starts from 1-21 November 2019. The maturity period is November 10, 2021. The minimum purchase value is IDR 1 million per unit and the maximum order is IDR 3 billion per unit.
The form of Green Sukuk ST-006 is scripless. The meaning of paper is written, printed, recorded, including non-cash payment instruments that are calculated in clearing. For example, checks, giro, money orders, credit notes and the like.
Green Sukuk ST-006 juga tidak dapat diperdagangkan, tidak dapat dialihkan, dan tidak dapat dicairkan sampai jatuh tempo kecuali periode early redemption.
What is meant by early redemption is a facility that allows investors to receive a portion of the principal repayment of ST006 by the government before the due date
The early redemption facility can only be utilized by investors with a minimum ownership of Rp 2 million in each Distribution Partner. And the maximum amount that can be submitted for Early Redemption is 50 percent of total investor ownership.
Regarding investment security, it is the same as government retail bonds that have been previously issued. Green Sukuk ST006 is guaranteed by the government so that the risk of default is virtually zero. (yos/nusadaily)