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View all search resultsIndonesia paves way to becoming sharia finance hub
Sharia finance makes up just 9.9 percent of finance industry
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I
ndonesia recently launched its largest sharia bank, Bank Syariah Indonesia (BSI), as it seeks to develop the country into a sharia finance hub.
The government of the world’s largest Muslim-majority country has been looking to develop its sharia economy since establishing the Indonesian Sharia Economy Master Plan 2019-2024 for becoming a prominent player in the global sharia economy.
Despite the ambitious plan, information on Islamic banking and finance has been generally lacking for consumers. According to the Financial Services Authority (OJK), Indonesia’s sharia financial literacy rate was a mere 8.93 percent in 2019, far below the conventional financial literacy rate of 37.72 percent.
Experts still maintain that sharia banking has potential to grow and even support the country’s larger halal economy.
Read also: Sharia finance thrives despite pandemic, to further grow in 2021: OJK
Law No. 21/2008 on sharia banking defines it as a banking system that is based on the principles of sharia, or Islamic law, and is regulated under a series of fatwas issued by the Indonesian Ulema Council (MUI).
Among the sharia principles are justice, equality and universal benefits, as well as shunning fraud, gambling, unjust and exploitative gains, cruelty and haram objects.
