VP Ma’ruf Amin Upbeat Indonesia to Become Major Player in Sharia Finance Industry

Vice President Ma’ruf Amin. (Photo by: Vice President Secretariat’s Press, Media, and Information Bureau)

Amid COVID-19 pandemic, the national halal industry is committed to providing added value to the Indonesia’s economy. The potential of the industry goes hand in hand with the potential of the national sharia finance industry.

“With the huge potential Indonesia has, I believe that the current position of Indonesia at the global level can improve, even Indonesia can become a major player in the global sharia finance industry,” Vice President Ma’ruf Amin said during the inauguration of the Indonesia Sharia Summit 2021 on Wednesday (22/09).

For the record, based on the report of Islamic Finance Development Indicators (IFDI) 2020, Indonesia is one of five countries out of 135 countries with asset value amounting to USD 3 billion. The rank is still below Saudi Arabia with a total asset of USD 17 billion, Iran with USD 14 billion, Malaysia with USD 10 billion, and Uni Arab Emirates with USD 3 billion.

According to the Vice President, the report from central bank Bank Indonesia (BI) recorded that the growth of halal value chain (HVC) for Muslim fashion products and halal cosmetics saw a rising trend. Meanwhile, the growth of the halal food and agriculture sector as the main supporter of the HVC is above the growth of the National Gross Domestic Product (GDP).  Moreover, the value of halal food exports has also increased from USD 30 billion in 2019 to around USD 34 billion in 2020.

The Vice President further said that the Government is currently partnering with the BI and the National Committee of Sharia Economic and Finance (KNEKS) to provide free halal certification for MSMEs, establish halal industrial areas in Sidoarjo (East Java province), Cikande (Banten province), and Bintan (Riau Islands province), and increase the capacity of sharia business actors. These initiatives aim to strengthen the HVC.

In addition to the initiatives, the Government will also carry out smart farming based on Islamic boarding school groups, Sharia Creative Industry Program (IKRA), Indonesia Industrial Moslem Exhibition (ii-Motion) as well as empower business units at Islamic boarding schools to collaborate with stakeholders of sharia finance industry.

In line with the strengthening of the HVC, the Vice President went on to say that the Government has carried out the strengthening of sharia finance industry by merging three state-owned sharia banks, namely Bank Syariah Mandiri, BRI Syariah, and BNI Syariah into Bank Syariah Indonesia (BSI). Moreover, the Government has strengthened the provision of the sharia financing in order to boost halal industry sector and sharia MSMEs, adding that, the strengthening policy and regulatory direction to support halal industry through the Financial Services Authority (OJK) and the Indonesian Deposit Insurance Corporation (LPS) also continued to carry out.

In order to strengthen the supporting infrastructure of the sharia finance industry, the Vice President added, the Core Principles for Effective Islamic Deposit Insurance Systems (CPIDIS) by the Working Group International Association of Deposit Insurers and Islamic Financial Services Board (IADI-IFSB) have been set. Meanwhile, the development of sharia social funds is carried out through the management transformation of alms, infaq, donations, and waqf.

“In terms of sharia economy and finance, the Government continues to take measures to strengthen the regulation and management, digitalization, research and innovation, human resources, awareness and literacy,” said the Vice President.

“The programs that have been launched include the National Campaign of Cash Waqf and the Love Alms (Zakat) National Movement, the Cash Waqf Linked Sukuk, adding that, there are also digitalization and sharing platforms, and the optimization of sharia social funds distribution to tackle COVID-19 pandemic,” the Vice President added.

Furthermore, the Vice President said that the Government will also continue to develop and expand sharia business activities to improve community’s economy. This initiative is carried out by building incubation centers and sharia business centers in several regions all over Indonesia through collaboration with the KNEKS, the Sharia Economy Community (MES), and the Indonesian Chamber of Commerce and Industry (KADIN).

“We hope that the country’s sharia economy and finance will be able to boost people’s economy and greatly contribute to the national economy,” he remarked. (VICE PRESIDENT SECRETARIAT/UN) (AP/MUR)