Takaful News - Indonesia: Regulator to promote Islamic REITs to attract Middle East investors
Source: Middle East Insurance Review | Jul 2016
Indonesia’s Financial Services Authority (OJK) is considering introducing a legal framework this year for the establishment of Islamic real estate investment trusts (REITs), in the hope of attracting more property investors, especially those from the Middle East.
OJK Deputy Director of Shariah Market, Mr Muhammad Touriq, said that the demand for Islamic REITS would be enormous as Indonesia has many Islamic financial institutions such as takaful companies that need medium-term investments, reported The Jakarta Post. There would also be demand from the Middle East.
“Takaful companies are interested in investing in REITs, but have failed to do so as the existing REITs are not Shariah-compliant. Middle Eastern investors also prefer to invest in property. We’re working on the regulations right now. We hope to finish the work in the third or fourth quarter this year,” he said.
To make Islamic REITs more attractive, Mr Touriq said that the government would provide a tax incentive for these products, equal to that accorded to conventional REITs. “The incentives are similar to those for conventional REITs. The difference is only in the securitisation, which will follow Islamic principles,” he explained.