Cash Waqf Linked Sukuk and Renewable Energy: Potential, Model, Strategy

Abstract

Developing renewable energy requires large investment funds, but the state financial scheme is not sufficient to meet the existing funding needs. On the other hand, the potential for cash waqf in Indonesia is quite large, but so far the collection and management of cash waqf in Indonesia is still not optimal. The focus of writing this work consists of three things, namely 1) Calculating the potential for cash waqf in Indonesia, 2) Describing the Cash Waqf Linked Sukuk (CWLS) model for renewable energy financing in Indonesia, and 3) Proposing strategies so that the CWLS model is maximized. The results of the work show that: First of all, the potential for cash waqf that can be collected and managed in Indonesia reaches IDR 52 trillion per year assuming that every productive-aged Muslim community in Indonesia sets aside 2.5% of their expenses for cash waqf. Second, the CWLS Model for renewable energy financing proposed in this work consists of 7 important steps and requires contributions from various parties (e.g wakif, nazhir, mauquf alaih, Ministry of finance, and others). Third, the strategy to maximize CWLS consists of four things including increasing Muslim community understanding and literacy regarding CWLS, increasing nazhir competence, using more sophisticated financial technology, and increasing transparency.