INDONESIA - EVENTS - 2nd BI Seminar on Islamic Finance - Can Islamic Finance Focus on Productive Economic Activities Promote Growth & Financial Stability? (Bandung - May 7-8, 2012)

www.bi.go.id - Development of Islamic finance would ideally promote financial transactions with underlying asset that attached to the goods market or productive economic activities. The application of this ideal is perhaps entails considerable challenge to Islamic financial institutions particularly in creating some sharia-compliant but economically feasible financial products. Yet, the actual stage of economic development in Indonesia, and possibly in other emerging countries, demand alternate solutions to channel available financial resources to productive economic sectors which not only offer growth opportunities, but expectedly would also fundamentally improve the output and structure of country’s economy.

Currently, the Indonesian Islamic Banking industry is characterized by a significant financing to deposit ratio, while placement to financial market products still relatively low. Nevertheless, the tendency towards the use of larger financial markets products continues to grow, as it may improve bank’s efficiency. Thus, the trend of disintermediation following the improving performance of financial markets and investment rating, are inevitably will affect the future shape of Islamic banking. However, the fact of repeated financial crises including the most recent financial market and debt crisis, seem to confirm risk pertinent to this tendency.

The experience from the latest financial crisis has, in general, changed the landscape of regulatory and supervisory framework of central banks, relevant authorities and development agencies. The changes referred to, among others, a tendency toward stricter regulation and monitoring especially for systemic financial institutions, restrictions on certain business activities, as well as enhanced transparency to reduce the potential for moral hazard. In some respects, these changes may not be relevant to the current state of the Islamic financial industry, though the nature of these policies still need to be understood by regulators. Perhaps more important is to reconsider the effectiveness of such solutions and any other alternatives in crisis prevention and what should authorities do, by exploring solutions which are more appropriate for more balanced and sustainable financial institution and economic growth from the perspective of Islamic financial system.

Development of Islamic financial system is inextricably associated to the interest of the state and development agencies to reduce poverty and improve various parameters of welfare for more balanced economic growth. These objectives can be achieved by involving the large part of communities in the process of economic development, which in the context of the financial system is done by making financial services acceptable by, as well as accessible to, the public. In this regard, it is important for Islamic finance stakeholders to adopt more effective strategy to strengthen the role of the Islamic financial institutions to improve public awareness and access to financial services.

With regard to the abovementioned issues, this seminar will address various topics related to the role of Islamic finance in supporting the development of real sector, while improving social welfare and enhancing financial system stability.

2012 May Bi Seminar Bandung

INDONESIA - CALL FOR PAPERS - 6th International Workshop, Bulletin of Monetary Economics and Banking THE MACROECONOMIC AND FINANCIAL RESILIENCE OF ASIAN MARKETS (deadline July 6, 2012)

Bank Indonesia website
2012 Bank Indonesia Call Papers

INDONESIA - BANKING - Islamic Banks Switch Gold Pawning to Consumer, Micro Financing

JAKARTA (IFT) - Islamic banks plan to switch the gold pawn business portfolio to retail consumption financing and microfinance, according to Islamic banker. This strategy is to anticipate the decline in gold pawning business, post-imposition of the new sharia regulation from Bank Indonesia. (source)

BANKING - Central Bank Forecasts Islamic Bank Assets to Jump by Up to 55% This Year

The assets of the nation’s Islamic banks are expected to grow by half this year as people in the world’s largest Muslim-majority state increasingly turn to the sector for their financial needs, according to a report by the central bank released over the weekend.

“If Indonesia’s economy grows at a decent pace, the assets of Islamic banks will increase by 55 percent,’’ said Mulya Siregar, director of Shariah finance at Bank Indonesia. (source)

BANKING - Sharia banks reap IDR1.05 trillion profit in 2010

JAKARTA: Profit of sharia banking industry last year reached IDR1.05 trillion or rose by 32.91% from previous year with total financing of IDR68.18 trillion. (source)

FINANCIAL MARKETS - BI absorbs IDR26.87 trillion from SBI auction

JAKARTA: Indonesian central bank, Bank Indonesia, absorbed IDR26.87 trillion from the auction of Certificate of Bank Indonesia (SBI).

Nonetheless, a significant number of fund was left unabsorbed since the indicative target had been met. Based on the auction results on 12 January 2011, BI determined the indicative target of IDR25 trillion for SBI maturing in 6 months and 9 months, as it also set IDR2 trillion indicative target for Sharia SBI due 6 months.

Bank Indonesia successfully derived IDR5 trillion from the six-month term SBI with 6.1% yield. The offering value of the government notes in fact reached IDR38.82 trillion.

FINANCIAL MARKETS - Indonesia Plans Sukuk Backed by Roads, Rail: Islamic Finance

By Suryani Omar

 

Jan. 13 (Bloomberg) -- Indonesia plans to increase the type of assets that can be used to pay returns on Islamic bonds to road and rail projects in a bid to support its $140 billion development program.

FINANCIAL MARKETS - Indonesia Sukuk Drop as Inflation Curbs Demand: Islamic Finance

By Soraya Permatasari and Suryani Omar

 

Jan. 14 (Bloomberg) -- Indonesia’s dollar Islamic bonds fell for a second week, after a record decline last quarter, as concern inflation will quicken outstripped optimism the nation will win an investment-grade rating.

BANKING - Assets of Sharia banks penetrates to IDR100 trillion

JAKARTA: The assets of sharia banks has penetrated IDR100 trillion by the end of December 2010 or grew beyond the expected target at the beginning of the year.

Deputy Director of Sharia Banking Directorate Bank Indonesia Mulya Siregar said that the asset has grown significantly within a month at the end of last year.

"Sharia banking assets jumped IDR7 trillion in December from IDR93 trillion in November, which showed the improvement of Sharia banking performance," he said, yesterday.

FINANCIAL MARKETS - Riding the financial market waves — Teng - HwangDBS Investment Management looking Indonesia

KUALA LUMPUR: Starting from ground zero ten years ago, HwangDBS Investment Management Bhd (HwangDBS IM) has staked its claim as the largest independent asset manager in the country currently.

According to HwangDBS IM chief executive officer (CEO) and executive director Teng Chee Wai in a recent exclusive interview with The Borneo Post, “The challenge now is not to sit back and relax, this is a marathon race and there is no finishing line in this business. The markets are open everyday the question is: are you there for the market?”

HALAL - Foreign agencies using MUI halal standards

Jakarta (ANTARA News) - At least 41 foreign food certification agencies have set their halal food standards based on inputs from the Indonesian Ulema Council (MUI)`s Food, Drug and Cosmetics Research Institute (LPPOM), an MUI official said,

Among the 41 agencies were those of a number of ASEAN member countries, Canada, England, Holland, Belgium, Turkey, Japan and the US, Lukmanul Hakim, the LPPOM head, said here Thursday.

FINANCE - Mahathir Mohamad: Islamic Finance to Grow and Prevail over Western Model in South-East Asia

Jeannifer Filly Sumayku | The President Post
The Islamic finance industry has been growing globally at a rate of 15 to 20 percent. Growth in ASEAN, according to some experts, is about 5 percentage points higher. Former Malaysian Prime Minister Dr Mahathir Mohamad has big expectations from how the industry is likely to shape up in the region.

He urged Muslims to expand Islamic finance so it could be as large as the Western banking industry. This can be done if more Muslims became businessmen and used Islamic banks for loans, he says.

FINANCIAL MARKETS - Tax cuts may boost Indonesia sukuk sales

(JAKARTA) Indonesia's plan to offer tax incentives for Islamic finance may spur sukuk issuance, which was 32 per cent that of Malaysia last year.
Sales of syariah-compliant debt rose 56 per cent to 26.2 trillion rupiah (S$3.77 billion) in Indonesia in 2010, compared with an 11 per cent drop to RM28.5 billion (S$12 billion) in Malaysia, data compiled by Bloomberg show.

BANKING - Indonesia cbank to ease approval of sharia products

Indonesia's central bank is aiming to simplify the approval process for Islamic banking products to accelerate the development of the country's Islamic finance industry, a central banker said on Tuesday.
Bank Indonesia, sharia board Majelis Ulama Indonesia and the Indonesian Accountants Association has established a working group whose job will be to review new Islamic banking products, said sharia director Mulya Siregar.

FINANCE - Global Sukuk Markets - December in Review

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Bank Negara of Indonesia is pushing ahead with its planned Sukuk and has announced it will be open for subscription on January 4. This would mark the first corporate issuance out of Indonesia since June 2010.
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BANKING - Indonesia Shariah Banking and Commodity Murabaha

Indonesia’s central bank is speeding up the approval process for new Islamic banking products by forming a 10-member joint committee with the nation’s board of Shariah scholars.

Under the existing system, products have to be first reviewed for compliance with Shariah law by the panel of scholars and then Bank Indonesia. The new group will start work in January and will have representatives from Bank Indonesia, Majelis Ulama Indonesia, which is the Shariah board, and the Indonesian Association of Accountants, Mulya Siregar, the central bank’s director in charge of Islamic banking, said in an interview Dec. 30.

BANKING - Bank Indonesia hosts IIFM's 23rd Board Meeting & Industry Seminar

Jakarta, Indonesia - 23 December, 2010 - The 23^rd Board of Directors meeting of the IIFM was hosted last week by Bank Indonesia at their offices in Jakarta. The meeting was attended by senior representatives from Bank Indonesia, Central Bank of Bahrain, , Labuan Financial Services Authority (Malaysia), Ministry of Finance (Brunei Darussalam), Islamic Development Bank, State Bank of Pakistan, Bank Islam Malaysia Berhad, Credit Agricole CIB, Standard Chartered Saadiq and the National Bank of Kuwait (Bahrain).

FINANCIAL MARKETS - Govt meets bond target, concludes 2010 sales

The government concluded its bond sales for 2010 on Tuesday as it met the target for funds needed to plug the lower-than-expected budget deficit, a ministry official says.

Rahmat Waluyanto, director general of the Finance Ministry’s debt management office, said the government sold Rp 2 trillion (US$222 million) in bonds in the final auction of this year, which raised the value of this year’s bond issuance to Rp 162 trillion.

BANKING - Sharia banks may get hedge funding tool next year

Member countries of the International Islamic Financial Market (IIFM) may soon enjoy a hedging facility to reduce risks of financial transactions, officials say.

The IIFM’s Board of Directors agreed on Monday to implement a hedging facility for the sharia banking industry in the first half of next year amid global currency concerns.

Bank Indonesia’s director for sharia banking, Mulya Siregar, said that IIFM member countries would sign a master agreement, called a tahawwut agreement, to accommodate the hedging facility.

BANKING - Assets of Syaria Banks to Reach Rp92 Trillion - Tahawwut Master Agreement signed with Malaysia, Brunei, Brunei and Kuwait

Director of Syaria Banking, Mulya E. Siregar, said syaria banks’ assets are projected to grow up to Rp92 trillion by the end of the year or a 3.1 percent increase of the total national bank assets. To reach this goal, syaria banks are collaborating with the National Syaria Board to produce a religious edict needed by the industry so they can accelerate product innovations.

To save transaction fees, Syariah banks have signed the Tahawu Agreement with Malaysia, Brunei Darussalam, and Kuwait. With this agreement, syaria banks’ transactions only need to refer to the contract model. Mulia hopes that in 2011, this can boost assets up to Rp130 trillion.