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Constraints and strategies for municipal Sukuk issuance in Indonesia

Imron Mawardi (Department of Islamic Economics, Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia)
Tika Widiastuti (Department of Islamic Economics, Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia)
Muhammad Ubaidillah Al Mustofa (Department of Islamic Economics, Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia)

Journal of Islamic Accounting and Business Research

ISSN: 1759-0817

Article publication date: 16 December 2021

Issue publication date: 11 March 2022

567

Abstract

Purpose

This study aims to examine the constraints in the issuance of municipal Sukuk in Indonesia and proposed potential solutions and strategies to support its implementation.

Design/methodology/approach

This study used the analytic network process (ANP) method with four groups of relevant respondents that comprised representatives from the local government, universities (academicians), experts (practitioners) and regulators.

Findings

Four elements support municipal Sukuk issuance: issuer (regional government or municipality), investor, market and infrastructure. The element with the highest score was the lack of commitment from the regional government in issuing municipal sukuk due to leadership change that occurs every five years. Thus, specific regulations that strengthen and regulate municipal Sukuk issuance and the support from the central government are the priority solutions and strategies that should be undertaken to encourage regional governments in issuing municipal Sukuk.

Practical implications

The establishment of specific regulations by the central government that support and strengthen municipal Sukuk issuance is necessary to promote successful implementation. Supports from the central government include tax incentives, accessible licensing processes and bureaucracy aids.

Originality/value

This study extended the literature by examining problems, solutions and strategies for municipal Sukuk issuance in terms of four aspects: the issuer (municipal government), investors, markets and infrastructure. The multiple aspect analyses provided a broader understanding of the lack of municipal Sukuk issuance in Indonesia.

Keywords

Acknowledgements

Funding: This research was conducted under the supports of the Research and Innovation Centre of Universitas Airlangga and the Ministry of Education (Kementerian Pendidikan) of Indonesia.

The authors would like to convey their deepest appreciation to the anonymous reviewers for the insights and comments on improving this research. The authors would also like to thank the Faculty of Economics and Business Universitas Airlangga for the financial supports.

Author contribution: All authors in this study have equally significant contributions to the work. The first author built the logical idea of the research, prepared the focus group discussions (FGD), conducted in-depth interviews with informants, compiled the questionnaire and wrote the literature analysis. The second author evaluated and criticised the model and was in charge of formulating the novelty of the study. The last author analysed the results and factors that should be considered, processed the data and concluded the research results.

Citation

Mawardi, I., Widiastuti, T. and Al Mustofa, M.U. (2022), "Constraints and strategies for municipal Sukuk issuance in Indonesia", Journal of Islamic Accounting and Business Research, Vol. 13 No. 3, pp. 464-485. https://doi.org/10.1108/JIABR-03-2021-0082

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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