Indonesia The New Power Of Global Islamic Finance

Photo illustration (Source: Antara)

JAKARTA - Indonesia is considered to have great potential in the global Islamic finance industry. This is reflected in the increasing public interest in Islamic financial products and services in the country.

"I believe that Indonesia will become a new force in the Islamic finance industry that can drive national economic growth," said Deputy Chairperson of the Indonesian Chamber of Commerce and Industry (Kadin) for National Entrepreneur Development, Arsjad Rasjid in a statement in Jakarta, Saturday, June 5.

According to Arsjad, Indonesia's Islamic finance industry is growing rapidly, which in 2019 was in fourth place, now (2021) Islamic transactions are in second place after Malaysia.

Until February 2021, Indonesia's total Islamic financial assets reached Rp1,836 trillion, an increase from December 2020, which reached Rp1,803 trillion.

Based on the Islamic Finance Development Indicators (IFDI) 2020 reports from the Islamic Corporation for the Development of the Private Sector (ICD) and Revinitiv from 135 countries, Indonesia is in the top 5 countries based on asset value with transactions of 3 billion US dollars, behind Saudi Arabia ( 17 billion US dollars), Iran (14 billion US dollars), Malaysia (10 billion US dollars).

“This progress reflects the great opportunity for Indonesia to become a global Islamic financial industry power. Moreover, our Islamic finance market share is still at 9.96 percent. We continue to push for the penetration of the Islamic financial services industry to continue to increase," said the candidate for Chairman of the Indonesian Chamber of Commerce and Industry for the period 2021-2026.

Arsjad revealed that Indonesia's increasing position at the global level could not be separated from the government's support that intensively conducts research, socialization, and education regarding Islamic finance. On the other hand, public awareness of the importance of the sharia industry also continues to increase.

Sharia economic sectors that have the potential to be developed in Indonesia include the sharia banking industry, non-bank financial institutions, capital markets, Islamic hospitals, hotels, tourism, halal culinary arts, and fashion.

In the midst of the outbreak of the COVID-19 pandemic, the Islamic financial services sector grew rapidly in 2020, increasing by 10.9 percent, higher than conventional banks which only grew 7.7 percent.

In November 2020, of the 180 million Muslim population in Indonesia, around 30.27 million were registered as customers of Islamic banks. The lack of maximum number of Islamic bank customers also indicates the potential for the wide market of Islamic banking in this country which has not been explored.

On the other hand, Indonesia also has potential in terms of the halal industry of IDR 6,546 trillion and the assets of Islamic banks in Indonesia are only around IDR 591 trillion.

"There are still many potential customers that have not been worked on. The number reaches 149 million people. Likewise, the business potential of the halal industry reaches IDR 5,645 trillion," said Arsjad.