Home Investor Corner Indonesia Wants To Be A World Islamic Finance Center

Indonesia Wants To Be A World Islamic Finance Center

Indonesia Set Ip the National Islamic Financial Committee to Enhance the Development of Sharia Business in the Country - Photo by Bappenas

JAKARTA (TheInsiderStories) – Indonesian government wanted to become the center of the world Islamic financial center to grab a potential global halal market of US$3 trillion in 2023, said President Joko Widodo. The country is one of the largest Moslem population in the world.

“With 11 percent of the world’ Moslem population will be an important country of this development,” said president after launched Masterplan of Islamic Economics for 2019 – 2024 at the National Development Planning Board Building in Jakarta, on Tuesday (05/14).

Widodo stated that it was time for Indonesia to become the world’ largest producer of halal products, from what had been only a consumer country.

“As I said in the latest debate, the government continues to encourage the development of the sharia financial sector in order to make Indonesia a producer of halal products in the future,” he reminded.

At present, Indonesian sharia finance is still not as passionate as conventional banks, whose have market capitalization worth of Rp7,000 trillion ($489.51 billion).  The capitalization of the sharia finance only reached Rp2,000 trillion.

Otherwise, the consumption of the domestic halal product has reached 36 percent of total domestic consumption. Its reported that halal product contribution to Indonesia’ gross domestic products (GDP) has only 20 percent.

The president revealed, the launch of the master plan could be a road map that would encourage the performance of the Islamic finance sector to be more passionate in the future. The master plan will also be used as a derivative of a more tangible and strategic implementation of the government program.

With that, Indonesia can be separated from the shackles of poverty and encourage equitable distribution of welfare and can drive strategic development in Indonesia.

“With the launch of this master plan, we made a big leap to build an Indonesian sharia economic ecosystem. And we need to ensure its achievement through a strict control mechanism,” said president.

The National Development Planning Minister Bambang Brodjonegoro also stressed that to encourage national economic growth, the launch of this master plan became a stimulant that encouraged Indonesia to become a major player in the halal industrial sector of the world.

He underlined, to achieve that goal, the government sought to encourage investment in the production sector to reduce domestic consumption behavior and to suppress the import of halal products by increasing exports.

The government will also issue a Government Regulation which is guaranteed to guarantee halal products and not burden Micro, Small and Medium Enterprises. Through the Ministry of Religion, the government will publish it in the near future.

“At this time, we admit, the government has not arranged the matter of how these halal products must develop through definite and clear regulations. So far, it is still under the license of the Indonesian Ulema Council,” he opined.

Brodjonegoro elaborates, there are four main strategic steps for the development of the Indonesian Sharia finance and economic system. First, halal value chain strengthening by focusing on sectors that are considered potential and highly competitive.

Then, strengthening the Islamic financial sector with a master plan that has been outlined in the master plan. Lastly, strengthening the SMEs sector as the main locomotive of the value chain.

Finally, strengthening in the field of digital economy, especially trade (e-commerce and marketplace) also financial technology, so that it can encourage and accelerate the achievement of other strategies.

Furthermore, the Director of Sharia Economic Development and Halal Industry of Sharia National Committee Afdhal Aliasar is committed to creating a marketplace concept that can accommodate the needs of the Indonesian Muslim population by collaborating with Bukalapak and Tokopedia.

“The committee wants to jointly build an e-commerce ecosystem that supports the sale of halal products through the digital marketplace platform,” he said.

In addition, the Committee also announced a collaboration between Sharia state-owned banks (BNI Syariah, BRI Syariah, BTN Syriah and BSM) with PT Fintek Karya Nusantara as the owner of payment application products LinkAja as a digital payment platform and sharia-managed electronic money.

“The people of Indonesia have the largest Muslim population in the world, so along with the development of digital technology, the sharia digital payment system will further facilitate the service of people’s needs,” he said.

According to The State of the Global Islamic Economy Report, the total expenditure of the world’ Moslem community in 2017 in various halal sectors such as food, beverages, pharmaceuticals and cosmetics, clothing, tourism, media and entertainment, and Islamic finance reached $2.1 trillion.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

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