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Sharia finance thrives despite pandemic, to further grow in 2021: OJK
The OJK aims to increase the sharia finance industry’s market share to 20 percent.
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Digital sharia service: A Bank Syariah Mandiri employee serves a customer at the lender’s Central Jakarta office. (JP/Wendra Ajistyatama)
I
ndonesia’s sharia finance has thrived despite the coronavirus pandemic, as its double-digit growths in assets and loan disbursement outperformed those of conventional finance, the Financial Services Authority (OJK) has said, highlighting a growing industry previously plagued by low demand.
Sharia finance industry assets grew sharply by 21.48 percent year-on-year (yoy) to Rp 1.77 quadrillion (US$125.31 billion) while loan disbursement increased 9.5 percent last year. That stood in stark contrast to the 2.41 percent contraction in loan disbursement recorded by the conventional financial industry, according to the OJK.
“We are confident that sharia finance will do even better in 2021,” OJK chairman Wimboh Santoso told a forum on sharia finance outlook on Tuesday. “The sharia finance industry will grow further, and we will be a world-class player going forward.”
Although Indonesia is the world’s largest Muslim country, the industry’s market share remained low at 9.9 percent of the country’s total finance industry because of low demand stemmed from low literacy and inclusion level.
Read also: State initiated Bank Syariah Indonesia to tap into global sukuk market
The OJK is aiming to increase the sharia finance industry’s market share to 20 percent, Wimboh went on to say, conceding that it would be a daunting task as the industry would not only compete with conventional players but also global sharia finance peers.
“We will need some strong players to get there,” he said, adding that local players must have strong capital, technology and human resources to boost the industry.
