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Jakarta Post

Indonesia's microtakaful: Where are we now?

  • Mohammad Mahbubi Ali
    Mohammad Mahbubi Ali

    Research fellow at the International Institute of Advanced Islamic Studies (IAIS) Malaysia

Kuala Lumpur   /   Thu, November 2, 2017   /  02:52 pm
Indonesia's microtakaful: Where are we now? A teller in Bank Panin Syariah Tbk serves a customer in Jakarta. (Kontan/Fransiskus Simbolon)

Indonesia is one of the most attractive Islamic financial markets in Asia, as it is home to the world’s largest Muslim population and Southeast Asia’s biggest economy. The country has huge potential for market growth in the Islamic finance sector, including Islamic microinsurance (microtakaful). Microtakaful is an important, yet untapped, segment of Islamic finance. This is particularly true considering that approximately 115 million Indonesians fall into the lower-income category. The fact that micro, small and medium enterprises (MSMEs) accounted for 99.99 percent of the country’s business enterprises and 97.16 percent of employment in 2013 further highlights the undisputable potential of this segment. The penetration rate of the takaful industry in Indonesia was only 0.08 percent in 2015, an indication that there is much room for the sector to grow. Indonesi...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.