IFN Indonesia, Jakarta, 1st October 2018

IFN Indonesia Forum 2018 discussed and debated emerging opportunities, issues and potential solutions for Indonesia’s Sharia’a finance industry. DDCAP Group had both Lawrence Oliver, Director and Deputy CEO, and Cassim Docrat, Director, DDCAP (DIFC), as moderators for two of the sessions.
Cassim Docrat led his panel in the discussion of ‘Developing the Islamic Asset Management Industry in Indonesia’ discussing how Badan Pengeloia Keuangan Haji (BPKH) will be a hugely important investor, and how its emergence is a significant boom for the local asset management industry. The panel proceeded to highlight what BPKH’s entrance will mean for Sharia’a compliant investment in Indonesia as well as debating what more could be done to further develop this important sector.
Oliver moderated a panel on Green, Sustainable and Responsible Finance and Investment in Indonesia and included Lawrence Oliver as moderator. The discussion focused on the significant local and regional interest in responsible finance and investment from Indonesia, including setting the notable precedent of the issuance of the world’s first green sovereign sukuk, which was issued in benchmark size of US$1.25bln. In addition, the panel considered what was needed to take green finance and socially responsible investment mainstream and whether sectors such as infrastructure would potentially benefit from its growth.

The event showed that there was potential and appetite for Islamic finance in Indonesia, the world’s most populous Muslim nation. The push for greater IF in Indonesia follows on from recent events in the summer, where on 27th July the country’s president inaugurated the National Committee for Shariah Finance, or KNKS for its abbreviated Indonesian name, as part of the government’s push to make Indonesia a global hub for the Islamic financial industry.

Paradoxically, Indonesia, a nation which has the highest number of Sharia’a-compliant banking institutions of any country in the world, is home to an Islamic finance sector which maintained a meagre market share of just 5.3% of the country’s total banking assets as of 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 23mn customers out of a total population of around 260mn.

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