The development of sharia capital markets and its role in financing the government projects

Abstract

The purpose of this study is to examine the possibility of sharia capital market utilization to fund government infrastructure projects and contribute knowledge and thoughts for the development of the Sharia capital market in Indonesia. The Sharia capital market expects to act as a source of funding, and it will not burden the financial condition of the government and the taxpayers. Besides that, this system will not lead a change of ownership of state assets if the government fails to pay the debt. The research methodology of this research is a literature review that sources from books, journals, and online articles. This study only examines the development of sharia capital markets and its market trading volumes contrasted to the 2015-2019 government's infrastructure development plans. The results of this study indicate that the Sharia capital market is developing quite well in Indonesia, but it is the smallest compared to the conventional one. Therefore, the government, in this case, OJK (Financial Service Authority) needs to invite and accommodate the scholars, preachers, and imams to participate in socializing Sharia capital markets to the public.