BI eyes to maximize the Rp300 trillion Islamic charity fund

Arif Gunawan Sulistiyono

Bank Indonesia (BI) is paving a way to empower the obliged donation in Islam (zakat) and Islamic charity (waqf), which has a potential up to Rp 300 trillion (US$ 22.23 billion), into Islamic bonds (sukuk) in a bid to maximize the fund to boost the economy.

BI’s Senior Deputy Governor Mirza Adityaswara said that both Islamic social fund has a huge economical assets but had yet to be financially maximized, thus ended up as lump-sum charity with limited multiplier effects.

“If the waqf asset coordinated well, it may be used as an underlying asset to issue sukuk, which ultimately could be used to finance the Islamic economy activities,” he said to the press on Wednesday in Surabaya.

Therefore, he continued, the Indonesia's central bank prepared an international standard to empower the waqf and the zakat fund, by channeling it for funding the business activity with many multiplier effects especially for the society.

BI’s Deputy Governor Perry Warjiyo added that the central bank has conducted discussion with Islamic Development Bank (IDB) and some Islamic economy experts to issue an international core principle of zakat and waqf.

“The core principle of zakat will be issued next year, while the core principle of waqaf is still in process. Under the new guidance, we may attach those social financing to the Islamic banking as the zakat management is closely related to the sharia-based banking,” he said.

At the moment, he continued, Indonesia has several zakat fund collectors with their own standards. Under the core principle, which would be the international best practice for zakat management, they would be rated in terms of the collection, transparency, distribution, including the risk mitigation.

Under the new standard, the zakat fund collection and distribution would closely involve the Islamic banking system and might be effectively used to empower the society, not ended as a lump-sum charity, Perry asserted.

“According to BI’s data, the registered waqf in Indonesia is at least worth Rp 300 trillion, from around Rp2,400 trillion of potential waqf in the country. If we use them as the underlying asset of sukuk, we’ll have huge amount of funds  for big project and small financing,” Perry added.

As for now, he continued, the government has boosted the sukuk market by facilitating the corporations to issue sukuk, beside issuing several sukuks through Finance Ministry to finance the infrastructure project. (Arif Gunawan S.)