Bank Indonesia: Global Islamic Financial Market Soars Amid Pressure From Conventional Instruments

JAKARTA - Bank Indonesia (BI) said that the global Islamic financial market was in a fairly brilliant performance in the midst of the COVID-19 pandemic situation. Bank Indonesia Deputy Governor, Sugeng, said the Sukuk (certificate) financing instrument had even succeeded in surpassing the performance of the conventional financial market in 2020.

"When the pandemic conditions have an extraordinary impact on the economy, we see that the performance of the Islamic financial market has actually improved", he said in a webinar entitled Sharia Economics and Finance organized by the Indonesian Banking Development Institute (LPPI) on Friday, December 3.

In Sugeng's notes, the Sukuk instrument even succeeded in achieving growth of nearly 20 percent year-on-year (YoY) throughout last year.

"Based on the recent Sukuk report from the International Islamic Financial Market, the issuance of global Sukuk reached a sizeable amount, namely 174 billion US dollars in 2020", he said.

To that end, the steps taken by Bank Indonesia together with the government and relevant authorities to continue to encourage the development of the Islamic economy and finance are in line with the current positive trend.

"We firmly believe that Islamic economics and finance can be the motor of future developments", he said.

In the previous VOI report, Indonesia was listed as one of the most active countries in issuing this sharia financing instrument.

In fact, the Ministry of Finance announced that Indonesia was the first country in the world to issue a green Sukuk financing instrument, namely sharia bonds with a combination of environmental principles. Since it was first released in 2018, this instrument has managed to absorb investor funds of up to tens of trillions of rupiah.

There are two types of instruments that have been released by the government. First, global green Sukuk with a value of IDR 3.5 billion US dollars or the equivalent of IDR 49.7 trillion (exchange rate of IDR 14,202). Second, retail green Sukuk with a domestic market share of IDR 6.88 trillion.