The Jakarta Post
The Financial Services Authority (OJK) will offer incentives to companies to encourage higher involvement in the sharia capital market, a senior official has said.
According to Nurhaida, OJK commissioner for capital market supervision, the authority is working on several schemes to reduce costs for companies wanting to issue sharia-based products or to engage in sharia-related activities.
'We are looking to charge different fees for the issuance of a sharia-based product, which will be lower than those charged for conventional products,' she said on Thursday on the sidelines of an OJK international conference on Islamic finance.
The lower fees are expected to provide greater convenience for companies and attract more involvement from them.
Nurhaida, added that the OJK had begun implementing lower fees for the issuance of Islamic bonds or sukuk, but more time was needed to yield a greater effect.
OJK regulations on fees show that it currently charges 0.05 percent for the issuance of conventional bonds, depending on the value of the debt paper, with the highest fee set at Rp 750 million (US$55,248) per issuance.
For sukuk, the fee percentage is set at 0.03 percent, but the maximum fee that the OJK can charge has been limited to Rp 150 million only for each sukuk issuance.
'We are also looking to issue six new regulations next week that will explain in detail the information about each sharia product available,' she said.
The six regulations will consist of information on sukuk, sharia stocks, sharia mutual funds, sharia asset-backed securities (EBA), sharia expertise and sharia insurance.
Currently all of this information is available in a single regulation only, which makes it difficult for companies to fully explore the sharia capital market, according to Nurhaida.
Meanwhile, the OJK once again reiterated the importance of developing sharia finance during the conference.
Even though Indonesia prides itself as the country with the world's largest Muslim population, its sharia financial industry remains relatively underdeveloped compared to neighbor Malaysia.
Data from the OJK shows that Indonesia sat in ninth place in terms of Islamic-finance assets last year with US$36.63 billion, just above Bangladesh. Malaysia, on the other hand, topped the list with assets of more than $423 billion.
The data also revealed that sharia-based products ' with the exception of sharia-compliant stocks ' generally make up between 4 percent and 20 percent of each of sector of the financial services industry.
Sharia mutual funds, sharia financing and sharia banking are listed as those with the lowest shares with 4.11 percent, 4.42 percent and 4.67 percent, respectively.
Meanwhile, OJK commissioner for banking supervision Nelson Tampubolon said that it was looking to grant approval for Bank Aceh to convert its banking operations to sharia.
The regional development lender, which is based in Banda Aceh in Aceh province, has submitted a request to the authority, but Nelson said it would take time to complete the whole process, 'probably early next year at the soonest.'
According to Nelson, the conversion of Bank Aceh will help increase the market share of sharia banking and the OJK expects to see similar moves come from other regional lenders.
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