Indonesia Could to be the Center of Sharia-Based Finance: Jokowi

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    TEMPO.CO, Jakarta - President Joko “Jokowi” Widodo expressed optimism that Indonesia has a huge potential to be the center of sharia-based financial system. Therefore, Indonesia needs to develop sharia-based financial sector.

    “I fully support such a campaign. We need to pay attention to the sharia-based financial service. This sector grows rapidly but it has not yet reached its full potential,” Jokowi said during an inauguration of a program initiated by the Financial Services Authority (OJK) in Jakarta on Sunday, June 14, 2015.

    Muliaman D. Hadad, chairman of the board of commissioners at the OJK, said Indonesia’s sharia-based financial industry was still relatively smaller compared to the national financial industry. Data from the OJK revealed that the sharia-based banking industry consists of 12 sharia commercial banks with 22 units of sharia-based business owned by conventional banks and 163 Islamic rural banks (BPRS) with a total asset of Rp264.81 trillion (US$20.3 billion) and 4.88 percent of market share.

    In addition, there are 98 Islamic non-bank institutions consisting sharia-based insurance companies managing Rp23.80 trillion (US$1.8 billion) worth of asset and other sharia-based financial institutions with a total asset of Rp12.86 trillion (US$989.2 million).

    The market share of those institutions has reached 3.93 percent of the total asset owned by the non-bank financial industry in general. By March 2015, the sharia-based shares traded at the sharia capital market reached Rp3,037.46 trillion (US$233.6 billion) that includes corporate sukuk worth of Rp7.1 trillion (US$546.1 million) and sharia trust fund worth of Rp11.7 trillion (US$900 million).

    ANTARA