Vice President Ma'ruf Amin: Sharia Financing Is An Option For Energy Transition Development

JAKARTA - The Vice President of the Republic of Indonesia, Ma'ruf Amin said that the energy transition policy requires very large financing and investment.

According to him, one of the ways to finance the energy transition can be done through sharia-based financing, because basically the principles of sustainable finance are actually in line with the principles of sharia finance.

"Sharia does not only contain laws that regulate human life but also protects their interests and benefits. One of the rules in sharia is the challenge of destruction on earth, preservation is one of the tasks carried out by humans in their worldly life. Therefore, the transition of sustainable energy is in line with the principle of - sharia principles, so that financing with sharia schemes can be utilized for this purpose," said Ma'ruf Amin to the media, Thursday, July 28.

Ma'ruf Amin sees huge potential to develop sukuk or Islamic bonds as an instrument to raise funds from the public to finance the energy transition.

"Therefore, I request that the innovation of sukuk products and their promotion be increased so that people are more interested in this product. The mechanism for project financing with sharia principles can also be applied as an alternative mechanism for financing energy transition projects," said Vice President Ma'ruf Amin.

Furthermore, he revealed, Indonesia needs at least 30 billion US dollars to finance the energy transition in the next eight years.

The energy transition will naturally occur if the prices of energy commodities sourced from NRE are more competitive.

"The problem is that the government's budget allocation for energy subsidies is still very large in order to maintain people's purchasing power, especially when world energy commodity prices increase," continued Vice President Ma'ruf Amin.

In terms of sources of financing, Islamic financing must come from the mechanism of sharia-based financial institutions.

One of the sources of Islamic financing that can be utilized optimally is cash waqf.

In 2018, the Indonesian Waqf Board stated that the potential for cash waqf in Indonesia reached IDR 180 trillion per year.

"On various occasions I have conveyed that waqf funds should not only be used for religious activities, but also used in other forms concerning the benefit of mankind, even the sustainability of life in the future, for example financing EBT projects or investing through Islamic finance that is profitable or profitable. the results are used to support sustainable energy development," he concluded.