RISING ROLE OF SHARIA ECONOMY IN INDONESIA by Fardah

 

Jakarta, 4/5/2021 (ANTARA) - Indonesia is indubitably catching up with other countries in the development of the sharia economy, although the world's largest Muslim population nation was considered as being rather late in paying heed to Islamic economics.

The world's fourth most populous country has realized the need to tap the potential of sharia economy, as the State of Global Islamic Economy Report 2020-2021 indicated that Muslim consumers' expenditure on halal food, beverage, pharmaceuticals, and tourism had reached US$2.02 trillion in 2019.

With a population of 271 million, of which almost 90 percent are Muslims, Indonesia is the world's biggest market for halal products, especially food, tourism, pharmaceuticals, and cosmetics.

Refusing to be a mere market, Indonesia is determined to play a bigger role in the sharia economy domestically and also globally, by developing four aspects: halal industry, sharia finance, sharia social finance, and sharia entrepreneurship.

The government's support is apparent from the several policies to develop the halal industry, including establishment of the Special Economic Zones (KEK) for the halal industry.

Moreover, President Joko Widodo, as head of the National Islamic Finance Committee (KNKS), had launched the Indonesian Islamic Economics Master Plan (MEKSI) 2019-2024 in May 2019, which is the country's first road map for Islamic economy that aims to strengthen the national economy.

In February 2020, the KNKS was transformed into the National Committee for Sharia Economy and Finance (KNEKS).

INDONESIA INCORPORATES ISLAMIC VALUES IN ECONOMIC RECOVERY POLICIES by Fardah

 Jakarta, 30/4/2021 (ANTARA) - Having the world's largest Muslim population, it's very natural for Indonesia to start looking at Islamic or sharia economic principles to strengthen its economic resilience and untap potential of the sharia economy.

The sharia economy is believed to enable the nation implement the recovery of its economy battered by the COVID-pademic, toward a just, sustainable, and green economy.

To develop the sharia economy at its full potential, the government in 2020, issued a presidential decree on the National Committee for Sharia Economy and Finance (KNEKS).

The Indonesian government, in fact, has mobilized innovative financing instruments, such as the issuance of Green Sukuk since 2018 to fund climate change action and support targets of the Sustainable Development Goals (SDGs).

The government has also set up the Environmental Fund Public Service Agency (BPDLH) to manage environmental financial resources and facilitate the development of trade and carbon pricing, according to Finance Minister Sri Mulyani Indrawati.

Indonesia is currently preparing a regulation on carbon pricing to serve as a guideline in formulating domestic policies and an institutional framework for setting carbon prices.

The minister remarked that transitioning to the green economy will have implications for financial stability and inclusion, so it is necessary to prioritize green financing instruments in the financial system.

Moreover, financial institutions should implement strong risk management supported by comprehensive information to assess climate-related risks.

Bank Sharia Indonesia vying for place among leading Islamic banks by Fardah

 Jakarta, March 20, 2021 (ANTARA) - Indonesia, the world's largest Muslim majority country, may have been rather late in entering the Islamic (sharia) business compared to other countries, but the mood in the nation is upbeat that it is catching up thanks to several advantages.

The Southeast Asian country is projected to have a population of 184 million Muslim adults, of which over 50 percent are from the upper middle class and mostly work in the private sector.

Besides, the nation's Islamic financial services are growing at a swift pace even as the pandemic ploughs on. Indonesia’s Islamic banking assets in 2020 grew by 10.9 percent, while the conventional ones only clocked 7.7-percent growth.

Likewise with third-party funds — Islamic banking recorded an increase of 11.56 percent, slightly superior to conventional banks, which registered a rise of 11.49 percent.

"In terms of financing, Islamic banking recorded the largest growth of 9.4 percent, far ahead of conventional banking that only grew by 0.55 percent. In addition, the market share of the Islamic capital market has reached 17.39 percent, and the number of cooperatives for savings and loans and sharia financing has reached 4,115 units," State Enterprises Minister Erick Thohir, concurrently chairman of the Sharia Economic Community, informed.

He said the development of Islamic economics and finance in Indonesia won it accolades from the international community in 2020.

This was apparent from the Islamic Finance Development Report 2020, which placed Indonesia in the second place globally and the Global Islamic Economy Indicator 2020, which placed Indonesia in the fourth position globally.

To strengthen the national sharia economy, the government on February 1 this year merged the sharia compliant subsidiaries of three state-owned lenders — Bank Mandiri, Bank Negara Indonesia (BNI), and Bank Rakyat Indonesia (BRI) to form Bank Sharia Indonesia (BSI).

BSI is expected to be one of the largest sharia banks in Indonesia and also the world, with total assets of Rp214 trillion and core capital of Rp20.4 trillion. It is also expected to propel the development of the halal value chain in the country. Based on the global index, Indonesia’s ranking in sharia economy and finance is among the top 10 in the fields of finance, food, and fashion,

Indonesia keen to harness untapped sharia economic potential by Fardah

 Jakarta, Feb 23, 2021 (ANTARA) - Indonesia, with the world's largest Muslim population, constituting almost 90 percent of its 271 million people, has yet to unlock the vast, untapped potential of the sharia economy.

It is grim reality that Indonesia continues to trail behind other countries, both Muslim majority and non-Muslim majority nations, in terms of sharia economic development.

Malaysia led the Global Islamic Economy Indicator in 2019, with a score of 111 points, while Indonesia ranked fifth, with 49 points.

The ranking of 15 countries, with a Muslim-majority populace, was based on the indicators of Islamic finance, halal food, Muslim-friendly travel, the modest fashion industry, media and recreation, and pharmaceuticals and cosmetics.

Apart from that, the country's Islamic economic literacy index remains low, notably at around 16.2 percent. In 2019, Indonesia’s sharia financial literacy rate was recorded at only 8.93 percent, according to data of the Financial Services Authority (OJK).

To promote the country’s sharia economy, President Joko Widodo (Jokowi) had inaugurated the Sharia Economic Brand on January 25, 2021, with the objective of raising public awareness of sharia economic activities.

"I welcome the inauguration of the Sharia Economic Brand. This is very important to increase public awareness as support for sharia economic activities," the head of state remarked at the launch of the National Movement for Cash Waqf and inauguration of the Sharia Economic Brand at the State Palace in Jakarta.

The head of state, concurrently chairman of the National Committee on Sharia Economics and Finance (KNEKS), remarked that the Sharia Economic Brand will unify forces to boost the added value of sharia economy in Indonesia.

Jokowi drew attention to the fact that sharia economic development was not only being conducted by Muslim-majority nations but also by other countries, including Japan, Thailand, Britain, and the United States.

"We must seize this opportunity by pushing for acceleration. We must work toward accelerating development of the national Islamic economy and finance. We must prepare ourselves as the center of the global Islamic economy," he emphasized.