Islamic finance grows more than 40 per cent a year, Bank Indonesia seminar told

Indonesia’s Islamic banking sector has been growing 40.2 per cent annually over the last five years, outpacing growth in conventional of 16.7 per cent a year over the same period.

Deputy Governor of Bank Indonesia, the country's central bank, Halim Alamsyah, officially opened the second international seminar on Islamic finance, 7-8 May 2012, in Bandung. The seminar was themed ‘Can Islamic Finance Focus on Productive Economic Activities to Promote Growth & Financial Stability’. President of the Islamic Development Bank (IDB) Group, HE Dr Ahmed Mohammed Ali was the keynote speaker.

The Deputy Governor forecast that Shari’ah-compliant banking could account for 15-20 per cent of Indonesia’s banking industry within 10 years, from just over four per cent currently. “We are confident Syariah (Shari’ah) finance will stimulate economic growth to a higher level and enhance the stability of the financial system,” he said at the opening of the Seminar in Bandung.

Indonesia’s Islamic finance assets were worth IDR 214 trillion ($23.2 billion), of which around 69.5 per cent are  banking assets. Indonesia has 11 Shari’ah-compliant commercial banks, 24 Shari’ah bank business units and 155 Shari’ah-compliant rural banks (Bank Perkreditan Rakyat) with total assets of IDR 152.3 trillion (about US$16.5 billion).

Halim said Bank Indonesia is ‘very serious’ in its efforts to expand Islamic finance, especially banking, is confident that it could contribute greatly to economic growth, financial system stability and social well-being.

Issues discussed at the Seminar in Bandung included:

• enhancing the role of authorities in realizing the virtue of Islamic finance towards sustainable economic development;
• revisiting current banking businesses and designing an enhanced banking model with optimal support for the real sector;
• extending financial services to larger parts of society for more balanced and sustainable economic growth;
• improving business values through Islamic finance (the preferred values and opportunities);

and challenges and opportunities in developing Shari’ah-compliant products to promote productive economic activity.Speakers and participants came from more than 11 countries including Turkey, UAE, Saudi Arabia, Bangladesh, Hong Kong, Bahrain, Thailand, Japan, Iran, Brunei, Malaysia, Singapore and Indonesia. The attendees include Board Member of the Central Bank of Turkey, Dr Lokman Gunduz; Head of BIS Asia Pacific, Dr Eli Remolona; Head of OREI, Asian Development Bank, Prof Dr. Iwan Jaya Aziz; the Governor of West Java, Dr (HC) Ahmad Heryawan; the Director General of the Indonesian Debt Management Office, Mr Rahmat Waluyanto; CEO of the International Islamic Financial Market (IIFM), Mr Ijlal Alvi; Dr Milani Zivadjil from the International Monetary Fund; as well as Prof Dr Iraj Toutounchian from Iran, an expert on Islamic Economics and Finance.

http://www.cpifinancial.net