NUSA DUA (TheInsiderStories) - The Indonesia government wants Jakarta become an Mega Islamic Bank (MIB) headquarter (HQ) in order to open new market access in Asia region, said one senior official on Wednesday. Currently, both Indonesia and Turkey wanted to be the host of Islamic Megabank.
MIB which is supported by Indonesia, Turkey and the Islamic Development Bank (IDB), is targeting become the global financial institution in accordance with sharia principles.
President of IDB Bandar Hajjar said, the discussions of Islamic Megabank are still ongoing. In the last month, technical working team meeting between Indonesia, Turkey, and the IDB also conducted at IDB HQ to carry out the plan.
“I am expecting that the team will soon to resume the establishing this bank,” Bandar said.
He added, the establishment of MIB is important to address the issue of Islamic finance low liquidity at the global level. Moreover, the existence of Islamic Megabank is also important because it provides instrument among Islamic local banks.
“In additon, the bank will also finance the infrastructure projects for member countries of the OIC (Organization of Islamic Cooperation) that comply with sharia,” he said.
Meanwhile, the Expert Staff of Policy and Regulation of Financial Services and Capital Markets of Finance Ministry Isa Rachmatarwata said the MIB is solution as a new source of liquidity as well as to creating market for Islamic banks.
“Most Islamic banks have been relying capital from deposits and interbank trading scheme which is actually close to usury,” said Isa.
Meanwhile, he said, the effort to address the incompatibility of that issue through infrastructure projects with sharia bonds or sukuk scheme is also constrained by the limited capital of Islamic banks.
He did not mention the amount of capital to be injected to Islamic Megabank. The Indonesian government is ready to inject capital between up to US$500 million. Beside capital issue, all of technical issue in related to the establishment of Islamic Megabank have been completed.
The government of Indonesia hopes Indonesia can be a host because its position in southeast Asia has the potential to create new markets in Asia than in Turkey which have been relatively close to Europe and the United States.
Indonesia, IDB and Turkey has formulating the establishment of of MIB since last year, which is expected to be a solution to the availability of funds for infrastructure development and liquidity needs of Islamic countries.
Mega Islamic Bank will be directed at financing long-term infrastructure. In addition, the institute also candidates to support the addition of liquidity in the economy of Islamic countries.
Liquidity is a major issue for developing countries like Indonesia, which was supposed to have high economic growth. The economic slowdown that occurred since 2008 until now to make the developing countries lose their source of funding to boost economic growth. This happens because during this source of funding is limited to the western countries, even though their economy is in trouble.
Indonesia as a largest Muslim population in the world has been known as home of Islamic bank with 12 banks, 34 sharia business units owned by conventional bank, and 163 sharia rural banks with total assets of 356.50 trillion rupiah in the end of last year or grew 22% from the previous year.
