THE IMPLEMENTATION OF SUKUK SYARIAH AS AN ISLAMIC

ECONOMICS SYSTEM FOR INFRASTRUCTURE REHABILITATION

AURELLIA AZH NINDY

20170430216

COMPARATIVE ECONOMICS SYSTEM

INTERNATIONAL PROGRAM FOR ISLAMIC ECONOMICS AND FINANCE

UNIVERSITAS MUHAMMADIYAH YOGYAKARTA

 Development is a business or a series of business growth and change that is planned and carried
out consciously by a nation, State and government towards modernity in order to foster the nation (siagian,
1994). Development is also a change to achieve better national conditions. It aims to foster the nation or
socio-economic development, and human welfare to be the main focus of development where the
implementation of community development determines the objectives of development implementation.
Data from the national statistics agency shows that Indonesia's economic growth in the past few years has
always reached 5%. Indonesia is the third country after China and India within the scope of the G20
countries that have economic growth above 5%, this shows that Indonesia's economic growth is in a fairly
good condition.

Besides achieving good economic growth, the condition of Indonesia's infrastructure is still not
sufficient enough so that Indonesia's economic growth cannot be said to be optimal. Infrastructure is the
foundation or design of work that underlies basic services, where facilities and institutions depend on the
growth and development of an area, community and system. So that infrastructure becomes something that
is very much needed by the State. Without infrastructure, production activities in various sectors of
economic activity cannot function. According to the data from World Bank, an increase in infrastructure
stock by an average of 1% will be associated with an increase in GDP of 1% as well. so, the greater the
infrastructure development, the greater the potential for increasing GDP. This means directly, infrastructure
can have an impact on increasing economic activity positively.

In realizing adequate infrastructure development, large costs are needed. Infrastructure is financed
by public funds. However, not all countries have sufficient public funds to build infrastructure to facilitate
economic activities. One alternative in financing infrastructure is to use Islamic sukuk. Sukuk itself in the
international world has received special attention. The total international sukuk emissions grew rapidly
from only around USD1 billion in 2002, to USD17 billion in April 2017 (Faniyah, 2017). This shows the
liquidity of sukuk as an investment instrument. But the issuance of indonesian sukuk when compared to
other countries is still small (Faniyah, 2017) and has never been implemented in funding infrastructure
rehabilitation in the disaster area.

Sukuk is proof of ownership of assets that are the basis for sukuk issuance (Hariyanto, 2002).
The National Sharia Council of the Indonesian Ulema Council defines sukuk as long-term securities based
on sharia principles issued by issuers to holders of Islamic bonds that require issuers to pay income to
holders of Islamic bonds in the form of profit margins or fees, and repay bond funds at maturity.

In order to improve infrastructure, it is expected that the government can issue syari'ah sukuk for
sale to investors and the public. this aims to increase the state budget and regional budget funds which will
later be allocated for infrastructure development. The implementation of sharia sukuk as part of the Islamic
economic system is expected to be a solution in infrastructure development and can be a new investment
medium that is mutually cooperative. So that it can provide benefits for all parties.

A. The Aim of The Paper

Based on the problems revealed, this paper aims to determine the effectiveness of sukuk
implementation in order to build national infrastructure so that it can advance the country's economy.

B. The Benefits of The Paper

1. It is expected that it can be a solution used in raising funds to build the country's infrastructure.
2. It is expected that sukuk can be a place for safe investment. This is because the government has
guaranteed that there are no failures in paying sukuk.
3. It is expected can increase the state and regional budget.

C. IDEA
1. The condition of infrastructure in Indonesia nowadays
Since the New Order (1966), Indonesia has been left behind in terms of infrastructure
development. Therefore, President Jokowi's steps to build infrastructure should be appreciated so
that Indonesia can compete with other countries. Even though it is important, public infrastructure
must be built with good calculations both the benefits, the quality, and the funding source so that it
does not become counterproductive. The collapse of the girder poles of the Becakayu toll road in
East Jakarta on February 20, 2018 further adds to the long list of accidents in the construction of
infrastructure projects both currently under construction and those that have just been completed. In
the past two years there have been at least 14 infrastructure project accidents. These accidents also
varied greatly, from the collapse of the crane , the collapse of the buffer shaft of the Soekarno Hatta
Airport, the toll road and the bridge that had collapsed, and so on. Beyond that, we even witnessed
the new Terminal 3 of Soekarno Hatta Airport being flooded and the ceiling collapsed. These
infrastructure accidents generally cost a lot of lives and losses.

These infrastructure accidents provide an indication of the low quality of infrastructure

building projects in the Jokowi government. Other indications are feared of corruption in the
construction of infrastructure projects so that the quality of buildings that do not meet the
standards. Another factor that worsens the quality of the project is that the work is in a hurry so it
is not in accordance with the SOP ( standard operating procedure ). These infrastructure projects
are also suspected of not having adequate EIA. In addition, the oversight function can almost
certainly not work properly. The Construction Rescue Commission does not seem to carry out its
duties properly. Above all, it is clear that there is a lack of coordination between government
agencies. These factors lead to carelessness in the execution of projects that produce low quality
infrastructure so that they ignore safety and security factors both during construction and after
construction is complete.

These consecutive accidents have created a strong image in the community that
infrastructure projects are expensive and some of which are financed with debts that are of poor
quality, and do not meet the safety and security requirements of users. On the other hand this
infrastructure project is generally commercial in nature which will sell its services to the public at
relatively expensive rates. It is feared that prospective users of paid infrastructure will be hesitant
to become consumers at least until later they are truly convinced and have been tested to be safe
from user safety factors. The consequences of this consumer behavior will be detrimental to the
infrastructure manager or business due to reduced income. A further consequence is that project
creditors worry about the project's ability to repay its credit.

A further result of low quality projects is the high cost of repairs and maintenance. In
addition, the economic life of the project has also shrunk, reducing the value of assets or the selling
value of the infrastructure. The low selling value of assets has the potential to harm investment and
disrupt the policies of the Jokowi government who want to sell finished infrastructure to get funding
for the construction of the next project.

It is common knowledge that infrastructure development is a political mainstay of Jokowi

to get public support. On the other hand, there are also many who view that these projects are too
ambitious and expensive when compared to similar projects abroad. Therefore, we can understand
President Jokowi's serious reaction to the infrastructure accident that could reduce his credibility
as the main sponsor of infrastructure development. The government took a dramatic step to suspend
all elevated projects(overpass) infrastructure in Indonesia such as LRT, elevated toll roads and
bridges. The Minister of Public Works indicated that there had been a construction error, so that all
had to be dismantled, both those who collapsed and those who did not. Although it is actually too
late, to prevent accidents further the government should conduct a total evaluation of the project's
technical implementation.
2. Sukuk as an instrument for state budget financing
The infrastructure conditions described earlier indicate that infrastructure rehabilitation in
Indonesia is urgently needed. Given that infrastructure is one of the basic drivers of the economy
of a region. Own infrastructure according to the definition of Oxford Dictionaries is the physical
structure and basic organization (such as buildings, roads, energy supplies) needed for the operation
of society and institutions. From the definition, the experts then divided infrastructure into seven
groups, including: transportation, transportation services, irrigation, waste management, buildings,
and distribution and energy products. (Mulyo & Santoso, 2018). Because of the large aspect of
infrastructure according to the definition of experts, infrastructure provides many fundamental
benefits. In the study of economic theory of development, it is explained that to create and improve
economic activities, adequate infrastructure facilities are needed. Therefore, in order to accelerate
economic recovery and strengthen a sustainable economic foundation, infrastructure is needed
(Widodo, et al., 2018). Infrastructure in writing this written idea is focused on public services such
as health services, education, transportation, and others that have been severely damaged due to the
impact of the disaster. Todaro and Smith in his book Economy Development (Todaro & Smith,
2006) argues that capital investments in the form of roads, railways, sea and air transportation,
public services such as health and education are important factors in economic development.
The capital needed for construction and infrastructure recovery is also a very important
part. So far the biggest source of rehabilitation funding has come from the APBN and APBD.
However, the state budget and regional budget owned by Indonesia are very limited, because
Indonesia is still in the stage of development which requires no small amount of funds. As we know
the government is increasing the pace of development that requires a lot of funds. Therefore, it also
requires a large amount of funds to rehabilitate Indonesia's infrastructure. The government is
preparing a special funding scheme for emergency response. Who can provide fast funds without
disrupting national development. Therefore, the alternative emergency funding specifically for
infrastructure is by issuing syari'ah tribes, one of the instrumental investments in shari'ah. Syari'ah
sukuk issuance can directly involve the community to build infrastructure where sukuk is a means
of community investment. So that the investments made are not only profit oriented but also social
and humanitarian.(Fatah, 2011) According to the Accounting and Auditing Organization for
Islamic Financial Institutions (AAOIFI), at Sharia Standard No. 17 concerning Investments, the
definition of sukuk is a certificate with the same value as part or all of tangible tangible property
ownership to obtain results and services in the ownership of assets of a particular project or certain
investment activities. In Sharia Standars AAOIFI Number 17 sukuk can be classified into 14
(fourteen) types of sukuk based on the contract and underlying asset used. Each type of sukuk has
 its own sharia provisions, both in terms of issuance and trading on the secondary market. In
practice, in the Islamic finance industry the fourteen types of sukuk can be classified into three
groups. First sukuk mudhârabah, namely sukuk issued under an agreement or contract mudhârabah
where one party provides capital (rab al-Mâl) and the other party has expertise (mudhârib), the
profit from the collaboration is divided based on the percentage of profit agreed upon at the
beginning of the transaction. and the losses incurred are borne entirely by the capital owner.19 Both
sukuk musyârakah, i.e. sukuk, are issued based on an agreement or musyarakah agreement in which
two or more parties work together to combine capital to build new projects, develop existing
projects, or finance business activities. Gains and losses incurred are borne jointly in accordance
with the amount of participation of each capital.20 The three sukuk ijârah, i.e. sukuk issued under
an agreement or contract of ijârah in which one party acts alone or through its representative sells
or rents out the right to an asset to another based on the agreed price and period, without being
followed by the transfer of assets. Sukuk ijarah can be divided into ijârah al-Muntahiya bi al-Tamlîk
(Sale and Lease Back) and ijarah Headlease and sublease.

3. How far the implementation of Sukuk Syari'ah can affect infrastructure rehabilitation
State sukuk issuance as infrastructure financing has been carried out since 2010,
infrastructure financing through State Sukuk is increasing. This is in line with the ministries /
institutions that utilize State Sukuk flights for project financing (Hariyanto, 2017). The enthusiasm
of the people in sukuk investing also experienced rapid development. For example, based on Bank
Syariah Mandiri Bandung data, the realization of the first series of sukuk sales reached Rp 9.5
billion or more than double the initial target of Rp 4 billion. The enthusiasm of the community in
investing sukuk, can not be separated from the benefits and profits provided by sukuk. As disclosed
by the Indonesian Ministry of Finance that sukuk is guaranteed 100 percent by the state, halal is
stated according to the Shari'ah by the Indonesian Ulema Council, and can receive regular
compensation every month and has the potential to obtain capital gains. The balance between
increasing sukuk issuance and public enthusiasm in investing is a great opportunity to issue sukuk
as a financing of Indonesia's infrastructure development.
The opportunity for the sukuk market in the community guarantees the availability of funds
for infrastructure rehabilitation faster. This is able to minimize the government's dependence on
foreign debt. So that Indonesia can stand on its own feet. Rehabilitation carried out needs to be
hastened because the wheels of the economy will not stop spinning. The lack of availability of
funds can hinder development. The availability of funds originating from foreign debt would
actually burden Indonesia in the future. With the implementation of sukuk available funds will
 provide benefits for development now and in the future. Because sukuk is a payment instrument
that is safe and relatively productive, it supports economic growth (Khatimah, 2017). Because
Sukuk is based on the syari'ah system which has the ultimate goal of community welfare.

D. Conclusion
From the writing of this paper, it can be concluded that the implementation of sukuk as a
financing of national infrastructure development can be a solution and a scheme for raising new
funds for the government. This of course can minimize financing from government debt. Sukuk
implementation techniques that are carried out follow the techniques of the implementation of State
Sukuk which have been regulated by the government Act Number 19 of 2008 concerning State
Sharia Securities. In technical terms it is the same as the syari'ah sukuk that was issued by the
previous government. However, what is different in this regard is the realm of syari'ah sukuk
implementation, namely as financing infrastructure development has a problem in funding matters.
With the application of sukuk to finance infrastructure development, it can improve the
Indonesian economy. In addition, the process of infrastructure rehabilitation is carried out under
the control of the Shari'ah principle so that the outcome produced is for the common benefit as the
goal of the Islamic economy.
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