REPUBLIKA.CO.ID, JAKARTA - Bank Indonesia has projected that market share of Islamic banking in the country to reach 5.25-6.25 percent by the end of 2014. Earlier, Indonesian central bank governor, Agus Martowardojo admitted that Islamic banking failed to reach this year's market share target of 5 percent.

"Our forecast is based on three growth scenarios: pessimistic, moderate, and optimistic," the Central Banks Executive Director for Islamic Banking Edy Setiadi said on Monday.

Based on the pessimistic scenario, economic pressures, especially trade deficit and exchange rate, will continue to hinder the performance of the real sector. Hence, Islamic banking assets were expected to reach 255.2 trillion IDR, while total third party funds were forecast to reach 209.66 trillion IDR and total funding at 216.72 trillion IDR, he stated.

"Based on the moderate scenario, funding sources such as the Hajj pilgrimage and private placement funds will still be available to Islamic banks, while the effective Islamic Economic Movement scheme will also help to increase sources and uses of funds," he added.

In line with the scenario, the total assets of Islamic banking are estimated to reach 283.57 trillion IDR, while total third party funds are forecast to reach 220.69 trillion IDR and total funding of 228.13 trillion IDR.

Edi said the Islamic banking could achieve its optimistic scenario if real sector performance to be restored in 2013. The better real sector performance will open wider opportunity for Islamic banking to utilize other sources and GRES to boost sources and uses of funds.

"The optimistic scenario can also be realized by their interconnections (between the banks and their principals or groups) and increased support from principal banks or groups, coupled with the realization of state-owned Islamic banks," he said.

Based on the optimistic scenario, the total assets of Shariah banks are estimated to reach 311.92 trillion IDR while total third party funds are forecast to reach 232.82 trillion IDR and total funding of 239.54 trillion IDR.

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