The director of Islamic financing policy at the finance ministry, Dahlan Siamat, told Reuters: "There is no reason to stop issuing sukuk, it has become part of our strategy.
What then is the solution to developing liquid secondary markets if the government limits the supply (thus creating scarcity that leads many investors to hold-to-maturity, further reducing the secondary market activity)? The government believes it will come through appointing primary dealers for government sukuk who will act as market makers: "They will have the responsibility as market makers, with this the market will be much more liquid". Expanding the number of market makers in secondary markets should make them more liquid, but when the supply is limited compared to demand (both to limit the use of higher cost sukuk and to limit the use of foreign currency debt), there should be a shrinkage of the bid-offer spread, but also more trading activity, which--if the demand is sustained for local currency sukuk--should lead to higher prices for sukuk (and therefore, lower yields on which new sukuk can be priced). The process will likely proceed in fits and starts because there will still be the problem of pulling sukuk from hold-to-maturity investors who may not want to sell their sukuk at any price because of the challenges in replacing it in with a new sukuk. However, if the liquidity develops and high demand leads to rising prices and falling yields, it should support the compression of the yield premium for sukuk, which will encourage greater issuance over the longer-term. If successful, it may provide an example of how to support secondary market liquidity that can be applied in other regions.