IslamicFinance.de

The Islamic financial sector in Indonesia relies on a combination from infrastructure projects and regulatory reforms to convince the sharia-compliant lenders to go on with the rapid expansion.
One of the reform sugested by Bank Indonesia is is to cut taxes payable by banks and clients on income from Islamic finance accounts. Bank Indonesia is also trying to bring together a committee of experts in order to generate an approval process for new products that is efficient.

PT Bank Muamalat planned to issue 1 trillion rupiah ($114.6 million) of sukuk in 2012 and that was considering raising up to 1 trillion rupiah in capital through a rights issue or sale of subordinated debt.

Bank Muamalat Indonesia is seeking to boost lending tenfold outside cities in 2011 after opening 30 new branches last year.
Islamic lenders accounted for 1.8 percent of the Rp 91 trillion ($10.4 billion) in loans to the farming industry in 2010, figures from the central bank show.
Offering services to growers of palm oil, cocoa and corn will help Islamic banks meet the government’s target of expanding assets by 55 percent this year, according to Bank Indonesia.

The International Islamic Liquidity Management Corporation (IILM) is expected to issue the first Shariah-compliant financial instruments by year-end.
The minimum size of the instruments could be US$300 million depending on the market demand.
The IILM was established on October 2010 with 14 founding shareholders, comprising the 12 central banks of Indonesia, Iran, Kuwait, Luxembourg, Malaysia,Mauritius, Nigeria, Qatar, Saudi Arabia, Sudan, Turkey, and the United Arab Emirates (UAE), as well as two multi-lateral institutions, the Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector.

Indonesia's finance ministry sold 1.15 trillion rupiah ($130.36 million) of 25-year sukuk.
The ministry received offers for more than four times that amount. The 25-year sukuk yield was slightly higher than the country's 20-year conventional bond.
Indonesia aims to issue global sukuk in the second half this year and is finishing regulations for the issue.

BI (Bank Indonesia) has also secured approval from the House of Representatives to join the newly established International Islamic Liquidity Management .
This is to attempt to grow the country's Islamic banking sector.

The Ugandan central bank is currently struggling to address demands for the first sharia bank in the East African country.
Bank of Uganda, the republic’s central bank, has therefore sent delegates to Indonesia, home to the world’s largest Muslim population, to learn more about Islamic finance.

Sharia-compliant reinsurer Best Re will grow its business in Africa and eventually expand into South America to diversify its sources of income which is mainly derived from Asia.
Asia, specifically countries such as China, Indonesia and Malaysia, accounts for three-quarters of Best Re's income and the company wants to bring this share to about 60 percent within five years.

Record car sales in Indonesia helped fuel 50 percent growth in Shariah-compliant banking assets last year and Islamic lenders are setting up booths at automobile shows to further develop the market.

Jamil El-Jaroudi, chief executive of Bahrain-based Elaf Bank, has unveiled plans to arrange Islamic bonds in South East Asia.
The Islamic investment bank won a mandate to act as financial advisor on sukuk issues in Malaysia and Indonesia.

Indonesia has moved to boost Islamic finance by proposing a series of tax incentives for the sector. The incentives are likely to stimulate sukuk issuance.
The measures will also encourage sales of Islamic debt from Indonesia, which has the world’s biggest Muslim population, with 88% of all inhabitants identifying themselves as being of that faith.

Indonesia plans to issue a 3-year maturing sukuk for retail investors on Feb. 23.
The sukuk, or Islamic bond, will be offered to all individuals with Indonesian citizenship, to widen the investor base.

Indonesia is the fourth most populous country in the world. Its capital city is Jakarta, which is located on the island of Java. Since the majority of the population of Indonesia are Muslims, Indonesia can be considered the largest Islamic state in the world in terms of population. The Indonesian economy is classified as a developing economy, and is known as a "Tiger Cub Economy".
This is a reference to the more economically advanced "Asian Tiger Economies" that include Hong Kong, Singapore, South Korea, and Taiwan.

Indonesia’s central bank is speeding up the approval process for new Islamic banking products by forming a 10-member joint committee with the nation’s board of Shariah scholars.
The new group will start work in January and will have representatives from Bank Indonesia, Majelis Ulama Indonesia, which is the Shariah board, and the Indonesian Association of Accountants.

Indonesia's finance ministry aims to issue 38.5 trillion rupiah of government bonds in the first quarter of 2011.
This doesn't include retail bonds, retail Islamic bonds and dollar-denominated bonds.

Indonesia’s Islamic bonds may extend this year’s rally that drove yields to record lows on prospects of further ratings upgrades.
PT Bhakti Asset Management’s BIG Dana Muamalah fund bought rupiah-denominated government sukuk in March.

The Central Bank of Indonesia has an aim: to create a strong sharia banking industry by 2015. This development strategy, as well as a broader sharia religious revival in the country that is helping to increase the popularity of sharia banking products, will lead to continuous strong growth in this sector during the forecast period.

The assets of sharia banks in Indonesia are anticipated to reach around Rp 399.6 Trillion in 2013 over Rp 107.1 Trillion in 2010.

Editorial Note: The news is linked to an outdated report: "Publish Date: Feb, 2009"

Prospects Indonesia will get a credit-rating upgrade from Moody’s Investors Services are pulling down yields on government Islamic notes from a two-month high and improving the outlook for a second global sukuk.
Moody’s cited “economic resilience” in putting the country’s rating. The government postponed an offering of Islamic bonds originally planned for July until the first half of 2011.

PT Bank Syariah Mandiri is adding branches in Java and Sumatra to offer so-called microfinance loans because more than 90 percent of Indonesia’s 50 million small businessmen have no access to regular bank financing.
PT Bank Muamalat Indonesia increased cooperatives set up to offer such loans by 500 to 2,500 last year. PT Bank Syariah BRI aims to triple its business next year.

Elaf Bank, a closely held Islamic investment bank in Bahrain, has applied for a banking license in Malaysia.
The Southeast Asian nation plans to issue two more Islamic bank licenses, including one of a new lender that will be jointly established by institutions from Asia and the Middle East.
Bank Negara Malaysia already issued conventional licenses to five foreign banks in June, including National Bank of Abu Dhabi and Indonesia’s PT Bank Mandiri.
The bank would use Malaysia as regional hub, covering Singapore, Indonesia and Australia.
It would try to use this as an opportunity to converge differing interpretations of Islamic finance between Malaysia and the Middle East by getting Shariah boards to work closely.