OJK Boss Wimboh Santoso Opens Up About The Weaknesses Of Sharia Compared To Conventional Ones

OJK Chairman Wimboh Santoso. (Photo: By courtesy)

JAKARTA - Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Wimboh Santoso said that Islamic finance in Indonesia is still far behind the conventional system that exists today. According to him, there are several factors that cause the condition of the Islamic financial system to be less developed even though it has great potential.

"We do know in this case that the community's need for sharia products and the institutional capacity is not comparable. In addition, the number of institutions itself is still less than conventional ones, ”he said in a webinar in Jakarta, Wednesday, February 10.

Wimboh added, the other side of why Islamic finance has limited movement is related to the problem of capital.

"We are in the authority to find 6 Islamic banks that still have core capital below Rp2 trillion, out of a total of 14 Islamic commercial banks as of December 2020," he said.

Furthermore, the OJK boss explained about the lack of public knowledge regarding sharia products and also the limited range of products.

"Financial literacy is still very low compared to conventional ones. Islamic literacy is only 8.93 percent of the national record of 38 percent. In addition, the financial inclusion aspect is 29.1 percent behind the national 76.19 percent, "he said.

Another problem that causes this sector to stagnate is related to the availability of competent labor.

"We see HR as a separate obstacle where there are not many people who can be hired. This can be seen clearly from the minimum level of competition for Islamic banks in producing products to be able to compete head to head with conventional ones, "he said.

In the future, with the momentum of the merger of three state banks into the Indonesian Sharia Bank (BSI), it is hoped that this will trigger the birth of innovations that can help the development of the Islamic financial ecosystem in the country.

"Research and innovation development must be carried out in order to produce the variety of products that the community needs. So, the market share of Islamic banking will dominate in the future, "said Wimboh.

To note, the conventional financial system is the majority in controlling financial assets with a percentage of 90.1 percent. Meanwhile, the Islamic law called OJK only plays a role of 9.9 percent of the total financial assets in Indonesia.