Urgency of Financial Ratio Screening Regulation for MSMEs Co-Funding on Securities Crowdfunding Service (Mu’amalah)

Summary

• As of May 7, 2024, the securities crowdfunding ecosystem in Indonesia had facilitated 356 securities issuances, consisting of 231 equity securities, 20 debt securities, and 105 sukuk securities.p.1
• The share of sukuk in sharia securities crowdfunding funding reached 30% as of May 2024, up from 22% in 2023.p.3
• The number of active crowdfunding organising platforms grew from 2 in 2018 to 16 in 2023, with 14 platforms registered with KSEI as of May 2024.p.9
• The study proposes a tighter usurious debt ratio threshold of 10–15% or down to 0% specifically for MSME sharia securities crowdfunding offerings.p.16

Key insights

1. 1. A legal vacuum exists because OJK Regulation No. 35 of 2017 applies only to public companies on the Indonesia Stock Exchange, leaving securities crowdfunding without legally binding sharia screening ratios.p.1
2. 2. Regulatory expansion from equity crowdfunding under POJK No. 37 of 2018 to securities crowdfunding under POJK No. 57 of 2020 enabled debt and sukuk offerings, driving multi-fold market expansion.p.3
3. 3. Total funding raised by MSMEs via securities crowdfunding crossed IDR 1,004 billion in 2023.p.7
4. 4. Investor participation surged more than five-fold in 2020 to 51,414 investors following the introduction of the broader securities crowdfunding framework.p.8
5. 5. Out of 14 active crowdfunding platforms recorded as of May 7, 2024, PT Shafiq Digital Indonesia was the largest sukuk issuer with 57 sukuk issues, while PT Investasi Digital Nusantara (Bizhare) led in equity with 99 ECF issues.p.11
6. 6. Standard public exchange screening allows up to 45% interest-bearing debt against total assets and 10% non-halal income, which is disproportionate for small-capitalisation MSMEs.p.13
7. 7. Islamic banking liquidity, including IDR 4.9 trillion in cash at PT Bank Syariah Indonesia Tbk, is sufficient to accommodate sharia MSME crowdfunding capital needs under a 10–15% or 0% usurious debt cap.p.16
8. 8. Existing regulations lack clear legal sanctions or transitional mechanisms when an MSME issuer exceeds the IDR 10,000,000,000.00 net asset ceiling after completing a securities offering.p.17