#Indonesia takes big step towards #boosting I#slamic #finance industry

Indonesia, that is so far a behind in developing a comprehensive Islamic finance industry, has taken a big leap towards the creation of a supportive framework for Shariah-compliant banking end of July. On that day, the country’s President Joko Widodo inaugurated the National Committee for Shariah Finance, as part of the government’s push to make Indonesia a global hub for the Islamic financial industry.
It has been tasked to accelerate, expand and develop Shariah-compliant financial services to support the country’s development, National Development Planning Minister Bambang Brodjonegoro said in a statement. The ministry is the one that introduced its master plan for the development of the country’s Islamic finance future last year.
Actually, Indonesia does have some kind of a hardly regulated Shariah-finance infrastructure that currently comprises 12 general Shariah banks, 22 Shariah business units of conventional banks, 58 takaful operators, 163 Shariah people’s credit banks, or rural Islamic lenders, around 5,500 rural cooperatives, seven Islamic finance-based investment firms, an Islamic microfinance portal and even one Shariah-compliant pawn shop, according to the ministry.
Paradoxically, this is the highest number of Shariah-compliant banking institutions of any country in the world. However, despite this, Indonesia’s Islamic finance sector maintained a meagre market share of just 5.3% of the country’s total banking assets in 2016, compared to 51.1% in Saudi Arabia, 33% in Qatar, 23.8% in Malaysia and 19.6% in the UAE. It also has just 23 million customers out of a total population of around 260 million. The reasons for the low market share are mainly the fact that there are no big Islamic banks with a strong brand name and many other hurdles.