This year is set to be a remarkable year for the development of sharia economy and finance in Indonesia. Together with the launch of the National Cash Waqf Movement, President Joko “Jokowi” Widodo welcomed the inauguration of the Sharia Economy brand on Jan. 25.
The President, who also chairs the National Committee on Sharia Economics and Finance (KNEKS), affirmed the sharia economy brand would join forces to increase the added value of the sharia economy in Indonesia.
This initiative was introduced during the seventh Indonesia Sharia Economy Festival (ISEF) 2020. The organizer collaborated with the KNEKS, which consists of 16 leaders of ministries and institutions, to invite all Indonesians to participate in a sharia economy brand competition. The winning brand was then developed further into a guidebook for collective use among the members of the KNEKS.
Indonesia’s vision of becoming a global center of the sharia economy and finance cannot be achieved through isolated efforts. Collaboration among the government, regulators, industry players and civil society is also highly necessary.
The sharia economy in Indonesia has developed very rapidly and is recognized by international institutions. This is something to be proud of and it is hoped that economic growth and Islamic finance will continue to consistently improve in the future.
The annual Global Islamic Finance Report (GIFR) 2020 has ranked Indonesia second in the 2020 Islamic Finance Country Index (IFCI), which measures countries based on the development of the sharia finance ecosystem.
Additionally, according to the 2020 Islamic Finance Development Report issued by the Islamic Corporation for the development of the Private Sector (ICD) together with Refinitiv, Indonesia has also risen to become the runner-up of the Islamic Finance Development Indicator (IFDI) country rankings. This achievement is due to the country’s growing strength in the Knowledge, Awareness and Governance aspects.
The State of the Global Islamic Economy Report 2020/2021 estimates that global Muslim spending is projected to reach US$2.4 trillion in 2024. This highlights the huge potential of the sharia economy to be captured and further developed. Currently, the report placed Indonesia in fourth, up by one rank from the previous year.
According to a survey conducted by Bank Indonesia in 2019, however, the Sharia Economic Literacy Index in Indonesia stood at 16.3 percent. With this level of sharia economic literacy, efforts are still needed to improve public awareness. This is one of the challenges in the development of the sharia economy.
To address this challenge, branding is needed to describe the sharia economy inclusively in a simple way. This brand in the form of a logo or symbol is developed to unite the movement to increase the added value of the sharia economy in our country.
Brands primarily function to help people become aware of, identify and distinguish certain goods and services (usually from competitors). The sharia economy brand highlights the shift that the Indonesian government has made from only focusing on sharia banking and finance to incorporating efforts to boost Islamic social finance, the halal industry and other sub-sectors of the sharia economy.
Building a brand also serves to communicate the values that the brand upholds. The tagline “Value for All”, inspired from rahmatan lil alamin, communicates the inclusivity that the sharia economy brand tries to embrace and the benefits it proposes to all parties.
From a marketing perspective, the sharia economy brand can be likened to an umbrella brand, i.e. using a single brand name to market a variety of related products, in this case, those within the sharia economy and finance sector. This includes, but is not limited to, sharia banking, sukuk, waqf, zakat, halal food, halal cosmetics and pharmaceuticals, modest fashion and Muslim-friendly tourism.
The term umbrella brand was coined by Wernerfelt (1988) as a way of signaling. The recent launch of Bank Syariah Indonesia (BSI) has been increasing people’s awareness of sharia banking and the potential benefits it can have on the recovery of the Indonesian economy in this ongoing pandemic. By implementing umbrella branding through the sharia economy brand, it is hoped that the awareness and perceived quality that people have so far of BSI and other existing products within sharia economy and finance, will accumulate to a single huge brand equity. This will build toward Indonesia’s goal to become the center of the global sharia economy.
Another potential benefit of umbrella branding is the ability to piggyback on existing brand awareness when a new product or service is launched in the future. Existing awareness of the sharia economy in general will spill over to the new product (Sullivan, 1990). Umbrella branding may even enhance the effectiveness of marketing programs and increase demand for these new products by informing people about the product’s quality (Erdem, 1998).
The inauguration of the sharia economic brand shows a strong commitment from the Joko "Jokowi" Widodo presidency to support sharia economy and finance advancement in Indonesia. It is hoped that the brand could be an effective top-down approach to boost awareness and eventually the growth of the sharia economy and financial sectors.
Nevertheless, in practice, implementing umbrella branding can be challenging because of the need to effectively coordinate among all individual brands. As the new logo can be used by government bodies and other stakeholders in the sharia economy, coordination and having a consistent communication theme is crucial.
A study by Madhavaram, Badrinarayanan and Mcdonald (2013) posits that in addition to having a brand identity, formulating and implementing integrated marketing communications (IMC) is a crucial component in building brand equity. The American Marketing Association defines IMC as “a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service or organization are relevant to that person and consistent over time.”
Anya Safira is a lecturer of Islamic marketing, Universitas Indonesia and Fadhil Akbar Purnama is a sharia economy and finance analyst at Bank Indonesia. The views expressed are their own.
Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.