ROLE OF ISLAMIC FINANCE Muhammad Cholifihani Director of Di of - PowerPoint PPT Presentation

REPUBLIK INDONESIA 4 TH ANNUAL SYMPOSIUM ON ISLAMIC FINANCE “ SUSTAINABLE FINANCE FOR POVERTY ALLEVATION; THE ROLE OF ISLAMIC FINANCE ” Muhammad Cholifihani Director of Di of Fin inancial Ser ervic ices And State Owned ed Enter erprises, Min inis istry ry of of Nati tional l De Developmen ent t Pla lanning (B (BAPPENAS) Kuala Lu Lumpur, , 11 Ja January 2018

INDONESIA’S NATIONAL DEVELOPMENT PLANNING REPUBLIK INDONESIA NATIONAL MEDIUM-TERM DEVELOPMENT PLAN 2015-2019 "The Realization of a Sovereign and Independent Indonesia with Personality based on Mutual Cooperation" Economic Growth Governance for Inclusive, Sustainable Environment Social Development Participative, and Transparent Development Source: National Middle-Term Development Plan 2015-2019 2

INDONESIAN GOVERNMENT WORK PLAN 2019 REPUBLIK INDONESIA Main Topic Priority Plan Government Work Plan 2019 Human development through  poverty alleviation Equitable Development for Reducing regional disparities  Quality Growth Strengthening economic  added value and creating jobs Food energy security  Security and stability  Indonesia’s government plan has aligned with Sustainable Development Goals Source: Government Work Plan , 2019 (processed) 3

REPUBLIK INDONESIA PRESIDENTIAL DECREE ON SUSTAINABLE DEVELOPMENT GOALS The signing of the Presidential Decree No. o. 59/2 59/2017 on SDGs implementation was an initial direction on SDGs, including: 1. Optimizing the role of Ministry of National Development Planning/Bappenas. 2. Involving all stakeholders:  Government & Parliament,  Philanthrophy & Business,  Civil Society Organizations,  Academics & Expert. 3. Institutional arrangement for SDGs. 4

INDONESIA’S COMMITMENT FOR SDGS REPUBLIK INDONESIA Ministry of National Development Planning Indonesia plays as coordinator in formulating National Action Plan on SDGs / Rencana Aksi (Renaksi) Achieving all the targets of SDGs will require the role of other Ministries/Agencies and Media Organizations, Philanthropy and Entrepreneurs as well as Academics and Experts to formulate action plans SDGs in national level. The formulating process has embraced the principle of inclusiveness by involving all parties and also emphasized the principles of partnership among stakeholders with trust, a partnership of equals, transparent, participatory, and accountable. Source: Sustainable Development Goals – Bappenas 2018 5

SUSTAINABLE DEVELOPMENT GOALS (1) REPUBLIK INDONESIA THE PILLARS OF SOCIAL DEVELOPMENT THE PILLARS OF ECONOMIC DEVELOPMENT THE PILLAR OF ENVIRONMENTAL DEVELOPMENT Ind Indonesia ia is one of the leading countries in the Asia Pacific region who is struggling to take one step THE PILLARS OF THE CONSTRUCTION OF LAW AND further in realizing these GOVERNANCE goals. Source: Sustainable Development Goals – Bappenas 2018 6

SUSTAINABLE DEVELOPMENT GOALS (2) REPUBLIK INDONESIA In accordance with National Long-Term Development Plan (RPJPN 2005-2025), the problem of poverty is captured within multidimensional framework of poverty, includes: i) The vulnerability and insecurity of society ii) The lack of fulfilment/fundamental rights of citizens and distinction of treatment on person or groups in order to living a life in dignity. Source: Sustainable Development Goals Bappenas 7

ROLE OF ISLAMIC FINANCE FOR SDGs REPUBLIK INDONESIA  Supports th Su the part rtnership ip and equit ity fin financin ing  Stim St imula lates profit fit and lo loss ss sh sharin ing system  Ensures so socia ial l resp sponsib ibil ilit ity and stabil ilit ity in investment  Emphasiz ize tangib ibil ilit ity of f fin financia ial l system Th The feature of f Isla Islamic ic fin finance can potentia iall lly reduce poverty, generate an in inequali lity and enhance the su sustain inabilit ility growth. 8

ZAKAT FOR SUSTAINABLE DEVELOPMENT GOALS REPUBLIK INDONESIA Zakat Fund for Empowered Village Micro Hydro Power Plant Program (PLTMH) in Jambi 2519 Villages all over Indonesia have no access Empowered Villages based on Zakat, to electricity Infaq & Sadaqah have been established and located in 1056 Zakat has supported the construction of villages across Indonesia. The Micro Hydro Power Plant (PLTMH) to number beneficiaries in 2017 provide electricity for a total of 806 reached almost 2 million people. households from 4 villages in Jambi province, benefiting approximately 8,000 people. Source: Ministry of Energy and Mineral Resource; United Nation Development Program 9

WAQF FOR SUSTAINABLE DEVELOPMENT GOALS REPUBLIK INDONESIA TOWER 165, JAKARTA ISLAMIC HOSPITAL OF MALANG Productive waqf land for VIP rooms, A commercial building built over mortmain was a pilot project on productive properties under waqf. The waqf money was waqf from grants. In less than 7 collected by YWBNB, managed by PT. Graha 165. years, it has reached BEP (break event point). In 2015, YWBNB’s ownership of the company’s shares reached 26.766 shares, with a value of AGRICULTURE around Rp Rp31 bill billio ion. 1550 Jab 1550 Jabon trees was planted on a waqf land of 2.5 ha in Bogor, YWBNB ( Yayasan Wakaf Bangun Nurani Bangsa) Indonesia. The benefits of the generally earns income from: harvest reaches Rp7 Rp750 mill illion per 6 1) the waqf cash amount to Rp Rp 48 48 bill billio ion, which was years. distributed to purchase shares of PT. Graha 165, worth Rp31 billion and purchase all units on the RENTAL FLATS FOR LOW-INCOME PEOPLE 5 th floor of the Tower 165 worth Rp 14,9 billion, Land waqf for rental flats building 2) dividends which an average of Rp 0,7 billion. for low-income communities in Bojonegoro 10 Source : Ministry of Religion; Indonesian Waqf Board (processed)

SUKUK FOR SUSTAINABLE DEVELOPMENT GOALS REPUBLIK INDONESIA SUKUK DE SU DEVELOPMENT IN IN THE LA LAST 5 5 YEARS Since 20 Si 2013 13, Project Su Sukuk has as contrib ibuted for Su Sustain inable le De Development Go Goals ls 2015 2015 2017 2017 2014 2014 2016 2016 2013 2013 Rp 1,5 Tri Rp Trillion Rp Rp 16,77 Tri Trillio ion Rp 800 Rp 800 Bi Billi lion on Rp 7,1 Tri Rp Trillio lion Rp Rp 13,67 Tri Trillio ion • Elevated & Double Trackrail • Dou • Dou • Ra • Ra Double trac rack ra rail il Double le trac track ra rail il Rail ilroa oads Rail ilroa oads • Roads, flyover/overpass/tunnel • Haj • Road • Road Hajj Dor Dormit itor orie ies oads and and Bri Bridges oads and and & bridges Bri Bridges • Infr nfrastructure for for • Flood control, lava, • Infr High Higher Edu Education nfrastructure management of urban drainage and and Re Relig igio ious for High for Higher & coastal security, dams Aff Affair airs Off Offic ice Edu Educatio ion and and management & other water container building, raw water Relig Re igio ious Aff Affair airs supply &management • Building, facilities & education facilities • Revitalization & development of Hajj Dormitory, construction/ rehab Center for Marriage & rituals of Hajj Source : Ministry of Finance (Processed) 11

SUSTAINABLE FINANCE FOR SUSTAINABLE DEVELOPMENT REPUBLIK INDONESIA FIN INANCIAL STABILITY FIN INANCIAL IN INCLUSION SOCIAL IM IMPACT IS ISLAMIC FINANCE IN INFRA DEVELOPMENT Isla Islamic ic fin finance takes an im important role le as s su sustain inable le fin inance to su support su sustain inable le develo lopment objec jectiv ives Source: On the Sustainable Development Goals and the Role of Islamic Finance, Mohieldin et al, 2015 12

REPUBLIK INDONESIA Thank You 13