Erick Thohir Regrets That Indonesia Is Late In Starting Islamic Finance, Losing To Malaysia Since 1963

JAKARTA - State-Owned Enterprises (BUMN) Minister Erick Thohir admits that he regrets Indonesia's delay in starting domestic Islamic financial activities.

According to Erick Thohir, this is one of the reasons why Indonesia is currently lagging behind a number of countries even though it holds the title of being the nation with the largest Muslim population in the world.

"Compared to other Muslim countries, Indonesia is indeed late in implementing the Islamic financial system. Indonesia started the sharia economy in 1991 with the establishment of the first Islamic bank, namely Bank Muamalat”, he said in a webinar, Wednesday, March 17.

He also gave a comparison of how the Malaysian allied countries had already officially started Islamic financial activities more than five decades ago.

"Meanwhile, Malaysia began to implement a sharia economy since the 1963 period", he said.

Even so, he is quite relieved by the development of the sharia economy in Indonesia in the last few years, especially in business entities that take the banking business segmentation.

"But Alhamdulillah, sharia financial services in Indonesia continue to grow, even in the midst of this pandemic, the Islamic financial services sector is able to grow quite rapidly", he said.

Erick explained, the growth of Islamic banking assets in 2020 increased by 10.9 percent compared to the 2019 period. This achievement was recorded higher than conventional banking which was 7.7 percent.

Then, for the collection of third party funds (DPK), Islamic banking grew 11.56 percent year-on-year, or slightly superior to conventional DPK which amounted to 11.49 percent.

In terms of financing, banks implementing the Islamic system achieved an increase of 9.42 percent, far surpassing conventional ones which only amounted to 0.55 percent. In addition, the market share of the Islamic capital market currently has reached 17.39 percent of the total in the financial market. "The number of sharia savings and loan cooperatives is more than 1,400 units and 75 units of Islamic financial services cooperatives that help and foster MSMEs throughout Indonesia", concluded Erick.