JAKARTA – With rapid strides and bright prospects, Indonesia is hoping to take the lead in the globally-booming Islamic banking industry, though the world’s most populous Muslim country still needs to clear away some hurdles.
“I believe that Indonesia would be a center of the global Shari`ah industry,” Adiwarman Karim, a member of the National Shari`ah Body at the Indonesian Ulemas Council (MUI), told OnIslam.net.
Indonesia currently has five Islamic banks, as well as 26 conventional banks which offer Shari`ah-compliant services.
The Central Bank’s data says assets of the Islamic banking industry have increased almost forty times over the past eight years, from $198 million in 2000 to $7.3 billion at the end of 2009.
Adiwarman, also president of KARIM Business Consulting, notes the industry has been expanding across the country, with 1,140 offices and 1,805 Shari`ah banking services in 32 provinces by December 2009.
“Those are indications that the industry is getting prospective.”
Riyanto, director of the Islamic bank Syariah Bukopin, says the industry’s growth is no less than 30 percent annually. “That’s tremendous achievement,” he told OnIslam. “With that big prospect, Indonesia is going to be the center of Shari`ah financial industry.”
The Islamic banking system is being practiced in 50 countries worldwide, making it one of the fastest growing sectors in the global financial industry. Currently, there are nearly 300 Islamic banks and financial institutions worldwide. A long list of international institutions, including Citigroup, HSBC and Deutsche Bank, are going into the Islamic banking business.
Starting almost three decades ago, it has made substantial growth and attracted the attention of investors and bankers across the world, with assets predicted to grow to $1 trillion by 2013.
Late but Growing
Adiwarman, the National Shari`ah Body official, says the industry had a late start in Indonesia, but it has grown significantly in a short time. “People have started to be aware that the Islamic banking industry is very important even though it remains small compared to conventional one,” he notes. “But it’s going to grow.”
The Shari`ah banking industry arrived to Indonesia 17 years ago, fairly late compared to other predominantly-Muslim countries like Malaysia, Iran and Pakistan.
“That’s why we are still small in quantity of customers,” explains Riyanto. He noted that the 2008 global economic crisis has boosted the demand on Shari`ah banking services in the most populous Muslim nation of 235 million.
The profit-sharing concept showed resilience in the face of the economic crisis which led people to shun conventional bank for Shari`ah-compliant ones.
“Many people said that the Shari`ah system is an alternative option in facing the economic turmoil.”
Islam forbids Muslims from usury, receiving or paying interest on loans.
Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.
Challenges
But, experts note,there are many challenges in developing the Islamic banking industry in Indonesia.
“The need of human resources in the Shari`ah banking industry is very high amid the limited number of professionals,” says Riyanto, the banker. “But, I think it’s only a temporary matter because a number of Shari`ah banks are preparing an internal training system to meet the demands of human resources.”
Another challenge, he adds, is that the products of Shari`ah, as newcomers in the market, must meet a number of requirements; one of them is the approval from the National Shari`ah Supervisory Body.
The Islamic banking industry also needs to be accommodated by the country’s laws and regulations.
“The existing regulations must be synchronized with Shari`ah rules in order for the industry to have equal treatment with the conventional banking system.”
But the highest priority for the industry, professionals assert, should be the people.
“We need to make the people more aware and knowledgeable about the benefit of Shari`ah system,” Riyanto says. “People must understand first the benefit of Shari`ah system not only from theological aspect but also from business side.”
Adiwarman believes the future will be bright. “Our absorbed market is still two-and-half percent, but don’t under-estimate Shari`ah. “It would be leading the industry in the future,” he contends.
Devi Indriawati, a small-medium scale businesswoman, is one of those recently attracted to the Shari`ah-complaint banking. “The profit sharing concept absolutely works,” she told OnIslam.net.
“So, we don’t have to bear the burden of paying interest if our business fails.”
“I believe that Indonesia would be a center of the global Shari`ah industry,” Adiwarman Karim, a member of the National Shari`ah Body at the Indonesian Ulemas Council (MUI), told OnIslam.net.Indonesia currently has five Islamic banks, as well as 26 conventional banks which offer Shari`ah-compliant services.
The Central Bank’s data says assets of the Islamic banking industry have increased almost forty times over the past eight years, from $198 million in 2000 to $7.3 billion at the end of 2009.
Adiwarman, also president of KARIM Business Consulting, notes the industry has been expanding across the country, with 1,140 offices and 1,805 Shari`ah banking services in 32 provinces by December 2009.
“Those are indications that the industry is getting prospective.”
Riyanto, director of the Islamic bank Syariah Bukopin, says the industry’s growth is no less than 30 percent annually. “That’s tremendous achievement,” he told OnIslam. “With that big prospect, Indonesia is going to be the center of Shari`ah financial industry.”
The Islamic banking system is being practiced in 50 countries worldwide, making it one of the fastest growing sectors in the global financial industry. Currently, there are nearly 300 Islamic banks and financial institutions worldwide. A long list of international institutions, including Citigroup, HSBC and Deutsche Bank, are going into the Islamic banking business.
Starting almost three decades ago, it has made substantial growth and attracted the attention of investors and bankers across the world, with assets predicted to grow to $1 trillion by 2013.
Late but Growing
Adiwarman, the National Shari`ah Body official, says the industry had a late start in Indonesia, but it has grown significantly in a short time. “People have started to be aware that the Islamic banking industry is very important even though it remains small compared to conventional one,” he notes. “But it’s going to grow.”
The Shari`ah banking industry arrived to Indonesia 17 years ago, fairly late compared to other predominantly-Muslim countries like Malaysia, Iran and Pakistan.
“That’s why we are still small in quantity of customers,” explains Riyanto. He noted that the 2008 global economic crisis has boosted the demand on Shari`ah banking services in the most populous Muslim nation of 235 million.
The profit-sharing concept showed resilience in the face of the economic crisis which led people to shun conventional bank for Shari`ah-compliant ones.
“Many people said that the Shari`ah system is an alternative option in facing the economic turmoil.”
Islam forbids Muslims from usury, receiving or paying interest on loans.
Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.
Challenges
But, experts note,there are many challenges in developing the Islamic banking industry in Indonesia.
“The need of human resources in the Shari`ah banking industry is very high amid the limited number of professionals,” says Riyanto, the banker. “But, I think it’s only a temporary matter because a number of Shari`ah banks are preparing an internal training system to meet the demands of human resources.”
Another challenge, he adds, is that the products of Shari`ah, as newcomers in the market, must meet a number of requirements; one of them is the approval from the National Shari`ah Supervisory Body.
The Islamic banking industry also needs to be accommodated by the country’s laws and regulations.
“The existing regulations must be synchronized with Shari`ah rules in order for the industry to have equal treatment with the conventional banking system.”
But the highest priority for the industry, professionals assert, should be the people.
“We need to make the people more aware and knowledgeable about the benefit of Shari`ah system,” Riyanto says. “People must understand first the benefit of Shari`ah system not only from theological aspect but also from business side.”
Adiwarman believes the future will be bright. “Our absorbed market is still two-and-half percent, but don’t under-estimate Shari`ah. “It would be leading the industry in the future,” he contends.
Devi Indriawati, a small-medium scale businesswoman, is one of those recently attracted to the Shari`ah-complaint banking. “The profit sharing concept absolutely works,” she told OnIslam.net.
“So, we don’t have to bear the burden of paying interest if our business fails.”
Source : http://onislam.net/english/news/asia-pacific/449560-indonesia-seeks-islamic-banking-lead-.html - Oct 30, 2010
No comments:
Post a Comment