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Government to improve legal framework on sharia finance
The government plans to revise a presidential regulation on the National Committee for Sharia Finance to allow business players in the sharia finance sector to benefit from the country’s large Muslim population.
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Bank Indonesia (BI) deputy governor Dody Budi Waluyo (center) shakes hands with Monzer Kahf, an Islamic studies professor at Hamad bin Khalifa University in Qatar, during the International Islamic Monetary Economics and Finance Conference in Jakarta on Tuesday, Nov. 12. (Courtesy of Bank Indonesia/-)
T
he government will mend the legal framework on the development of sharia finance to unlock the untapped potential of the sector.
In his address at the Indonesia Sharia Economy Festival held in Jakarta on Wednesday, Vice President Ma'ruf Amin said improvements to the regulatory framework would be made through a revision of Presidential Regulation (Perpres) No. 91/2016 on the National Committee for Sharia Finance.
He expressed hope the revision would allow business players in sharia finance to maximally benefit from the country’s large Muslim population.
"The revision of Perpres No. 91/2016 will expand its scope [from only sharia finance] to sharia economy, in which the president will serve as the chairman and the vice president the managing director of the National Committee for Sharia Finance," the former chairman of the Indonesian Ulema Council (MUI) said.
He said he believed the sharia economy could help decrease the wealth gap and boost financial inclusion.
Ma'ruf said the government would help promote the sharia economy in the country's halal industry, namely in tourism, food and beverages, fashion and social funds such as zakat and waqf — a form of endowment specifically intended for charitable causes, usually given in the form of assets such as land or buildings.
"Through this initiative, we hope that stakeholders can work together to strengthen the industry," said Ma'ruf, adding that the current market share of the sharia economy was 8.6 percent while the share of sharia banks was 5.6 percent.
