History of Islamic Capital Market in Indonesia began with the launch of Mutual Funds Sharia by PT. Danareksa Investment Management on July 3, 1997. Subsequently, the Indonesia Stock Exchange in collaboration with PT. Danareksa Investment Management launched the Jakarta Islamic Index on July 3, 2000 which aims to guide investors who want to invest their funds in Islamic financial products. With the presence of the index, then the investor has been provided the stocks that can be used as a means to invest in accordance with Islamic principles.
Since November 2007, Bapepam-LK has issued a Islamic Securities List (DES), which contains a list of Islamic stocks in Indonesia then the public will be more easy to know what stocks are in accordance with Islamic principal because DES is the only reference to the Islamic stock list in Indonesia. The existence of DES is then followed by the launching of IDX Indonesia Sharia Stock Index (ISSI) on May 12, 2011. ISSI constituent consists of all Islamic stocks listed on the Indonesia Stock Exchange.
DES is a collection of effects which are not contrary to the Islamic Principles on Capital Market, which is set by Bapepam-LK or parties approved by Bapepam-LK. DES is a investment guide for Islamic Mutual Fund in placing managed fund and also can be used by investors who have a desire to invest in a portfolio of Islamic securities.
As of March 2013, there were 321 Islamic stocks contained in the List of Islamic Securities (DES). Of 321 Islamic stocks, 317 of them obtained from the periodic review of DES and 4 shares obtained from the incidental review of DES.
Periodic DES is published periodically by the end of May and November each year. Periodic DES was first published Bapepam-LK in 2007.
Incidental DES is not published regularly. Incidental DES published when:
• The determination of stocks that meet the criteria of Islamic securities simultaneously with the effectiveness of the registration statement of which the Issuer or the initial public offering registration statement Public Companies.
• The determination of the Issuer or Public Company and that meet the criteria of Islamic securities based on periodic financial reports submitted to Bapepam-LK after the Decree of Periodic DES.
Furthermore, Islamic investment instruments in the capital markets continue to grow with the presence of Islamic Bonds issued by PT. Indosat Tbk in early September 2002. The instrument is the first Islamic Bonds and the covenant used is mudharabah. Up to now, the Islamic Securities issued in the Indonesian capital market includes the Islamic stocks, Sukuk, and Islamic Mutual Fund.
In the last decade, Islamic mutual funds showed a significant development. In 2003 there were only 4 sharia mutual funds and increased to 58 Islamic mutual funds in 2013. As of March 2013, there are 16 a mix product of Islamic mutual funds, eight fixed income Islamic mutual funds, 13 Islamic equity funds, and 20 protected Islamic mutual funds with net total assets (NAB) IDR 8.5 Trillion.
Islamic stock index is an indicator that shows the performance / movement of the Islamic stock price index existing in Indonesia Stock Exchange. Since May 12th 2011, BEI has two Islamic stock index, the Jakarta Islamic Index (JII) and Indonesia Sharia Stock Index (ISSI).
The performance of two existing Islamic stock index in Indonesia Stock Exchange, JII and ISSI, cannot escape from Composite Stocks Price Index (IHSG) market condition in Indonesia. JII and ISSI has a slightly different composition where the shares are included in the JII is the 30 most liquid stocks that pass the Islamic stock screening criteria. In other words, JII comprised of stocks that meet the entry criteria of LQ45 and also Islamic stock criteria. Whereas ISSI is all shares of the listed issuer that meet the criteria of Islamic stocks. Since September 2013, the number of issuers that enter into the ISSI is 310 issuers. Although the number of constituent stocks is different, distribution and composition of ISSI JII stocks have similarities when viewed from the business sector. More than 60% of shares in the JII and ISSI are consumer goods sector stocks, basic materials and telecommunication services.
Islamic capital market in Indonesia is not only attractive to the Muslim market but also those of non-Muslims. In addition, investors in the Islamic capital market is divided into 37% of Islamic investors (Islamic banks, Islamic mutual funds, insurance sharia, sharia pension funds) and 63% non-Islamic investors (banks, public pension funds, securities firms, general insurance, common mutual funds ).
The development of the sukuk market in Indonesia
Sukuk is one of the new Islamic financial instruments emerged in Indonesia in 2002. Sukuk is essentially similar to the stock but has a certain period of time. The presence of sukuk in 2002 is a distinct innovation in the development of the Islamic capital market in Indonesia because it can be an alternative instrument for corporate bonds that require external funding sources.
Seen from the type of issuer, there are two types of sukuk in the Indonesian capital market, namely corporate sukuk and government sukuk. As of July 2013, the value of outstanding government sukuk is IDR 9.328 billion while the value of outstanding corporate sukuk is IDR 6,674 billion. The Government sukuk outstanding value that has not been yet published covering the entire of State Sharia Securities (SBSN) government as some kind of SBSN is non-tradable.
Since it was first published in 2002 to the present, corporate sukuk in Indonesia has been progressing quite rapidly. As of June 2013, there were 61 emissions sukuk issued by companies in Indonesia and 38 are still outstanding sukuk. Value of sukuk issuance in March 2013 amounted to IDR 11.924 billion, while the value of sukuk outstanding in the same month IDR 8.387 billion.
The development of Islamic mutual funds in Indonesia
As of March 2013 there were 58 Islamic mutual funds types of products offered to the public. The number is still far less when compared to the number of conventional mutual funds in the community which reached 694 products.
Of 58 Islamic mutual funds, 34.48% of which is a protected mutual funds, 27.58 is the mix product of mutual funds, 22.4% is equity funds product, and the rest is a product of fixed-income funds.
The growth of Islamic mutual funds product is running quite well although the growth is not too high. But in terms of the number of products and the value of NAB, the growth of Islamic mutual funds is still better than conventional mutual fund growth. In conventional mutual funds, there are several products removed thus lowering the overall value of conventional mutual funds NAB. As for Islamic mutual funds, although the number of product remains when compared to 2012, the Islamic mutual fund NAB values tend to increase.