In October 2019, a Yogyakarta-based Islamic microfinance cooperative broke new ground with its primary Sukuk issuance on blockchain using Blossom Finance’s SmartSukuk platform. The Shariah compliant securitization and investment platform is now gearing up for a series of Sukuk issuances to be completed by the end of October 2020.
Matthew Martin, the founder and CEO of Blossom Finance, tells IFN Fintech that this time around, there will be four issuers — also Islamic microfinance cooperatives — worth IDR2 billion (US$135,839) per facility with a 12-month tenor each.
“The issuances will be classed as direct foreign loans, we are not allowing any Indonesian retail investors and the issuers are regulated under the Ministry of Cooperatives so they are legally authorized to accept foreign investment under that structure,” Martin noted.
The Indonesian Islamic financial market, particularly the Islamic fintech sector, has received much support from the government, whose initiatives push for the development of the country’s Halal economy and Shariah finance industry.
“Certainly, the regulators have done a great job in supporting (the Islamic fintech sector) and they have been open about communicating with us on which other areas we will need support in. But there needs to be more coordination between them,” Martin explains, particularly between the departments that look into the legal or framework aspects, and the ones that are in charge of implementation.
The fintech sector in general has also been in the spotlight following the coronavirus outbreak, when everyone was driven to embrace technology. In terms of business, Martin says they were affected, but not as badly as others.
“We were very fortunate that our investment is concentrated in the real sector, so our portfolio was relatively unimpacted by the coronavirus. It took a dip, but in terms of returns in annualized yield to maturity, it never went below 12% and in fact came out at 15%.”
This is an excerpt of an interview with Matthew Martin, the founder and CEO of Blossom Finance. For the full discussion on the Islamic fintech sector of Indonesia, log on to IFN Podcasts.