In Indonesia, Islamic finance is expected to account for 20% of the banking market in Indonesia in 2023, compared to 8% currently.
In Indonesia, with the development of legislation governing Islamic finance, the share of the banking market consisting of financial transactions and conventional products in accordance with the principles of Sharia should increase to 20% in 2023.
Indonesia diversification of Islamic finance products offered by the halal banking sector and the stock market also supports the conventional financing. In addition, the Central Bank will soon issue new alternative financial products (Sukuk Bank Indonesia), to strengthen the instruments of Islamic finance.
Economic growth in Indonesia has averaged about 6% since 2008. Shariah-compliant financial service providers currently account for only 4.5% of total banking sector assets. Between 2008 and 2012, Islamic bank assets tripled, increasing by an average of 31.5% annually. Strong growth in the past five years was helped by the Shariah Banking Law introduced in July 2008. Since then, the number of Islamic banking outlets has increased from 241 to 517, comprising 11 fully Shariah-compliant banks, 24 Islamic banking units and 158 Shariah-compliant rural banks. Islamic bank’s network has spread with the number offices rising at a rate of 27% year-on-year.
State-owned secondary mortgage company Sarana Multigriya Finansial (SMF) has officially launched a standard operating procedure (SOP) for Islamic banks in providing funds to housing developers.
INDONESIA'S ISLAMIC MORTGAGE LENDERS