Kamis 07 Dec 2023 22:05 WIB

Sharia Economy Becomes the Engine of Indonesia Economic Growth

The performance of various sectors of Indonesia's sharia economy and finance grew positively.

Rep: Dian Fath Risalah/ Red: Lida Puspaningtyas
Rector of the University of Indonesia (UI), Prof. Ari Kuncoro.
Foto: Dok UI
Rector of the University of Indonesia (UI), Prof. Ari Kuncoro.

REPUBLIKA.CO.ID, JAKARTA -- Indonesia, as the world's largest democratic and Muslim-populated country, has naturally been at the helm of the development of the global sharia economy. Indonesia has also become a model for the realization of Islam and progress.

University of Indonesia Rector Ari Kuncoro said, future world economic conditions will continue to challenge the effects of geopolitical conflicts, both in Europe and the Middle East region.

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“Thus, the sharia economy can be the engine of domestic economic growth. This is something very important, because if we see that all kinds of alternatives to growth engines in this uncertain situation should be utilized in the best possible way,” he said in the seminar and launching Indonesia Sharia Economic Outlook (ISEO) 2024, quoted Wednesday (6/12/2023).

According to Ari, this is proofed by the performance of various sectors of Indonesia's sharia economy and finance growing with a positive trend. Total sharia banking assets reached Rp 831.95 trillion, growing 10.94 percent on an annual basis as of September 2023, contributing to a market share reaching 7.27 percent.

Sharia Banking Third Party Fund (DPK) reached Rp 637.63 trillion, growing 9.26 percent on an annual basis. In addition, total financing reached Rp 564.37 trillion, growing 14.66 percent from the same period of the previous year.

The sharia capital market is also enjoying significant growth as seen from the number of investors to market capitalization. The Islamic social finance sector does not want to lose

where there has been a consistent increase in the hoarding of ZISWAF funds in at least the last 5 years.

In the halal industry, all four sectors of the halal value chain recorded a contribution of 25 percent of GDP with a growth rate of 4.3 percent. Almost the same as Indonesia's GDP growth.

This brilliant performance, Ari continued, is not despite the government's consistent efforts to realize the vision of the sharia economic and financial master plan 2019-2024, Indonesia as the world's leading sharia economic center.

“The series of policies in the form of regulation and strengthening of institutions continues to be born. For example, over the past two years, 24 Sharia Economic and Financial Regional Committees have been formed in different provinces. Of the physical legal products the most recent is Law No. 4 of 2023 on Strengthening and Development of the Financial Sector which strengthens the Banking Law No. 21 of 2008 on Sharia Banking,” he said.

In addition, to strengthen Indonesia's halal industry, recently Indonesia Halal Industry Master Plan 2023-2029 has been launched by Vice President Ma'ruf Amin. This is expected to be a common foundation for Indonesia's realization as the world's leading halal producer center.

Therefore, he is optimistic that through consistent reviews from various stakeholders, sharia economics and finance will continue to move forward. The ISEO of PEBS FEB UI is also committed to providing valuable and key inputs on the direction of sharia economic and financial development for various policy actors.

Head of the Center for Sharia Business Economics, Faculty of Economics and Business, University of Indonesia (PEBS FEB UI) Rahmatina A emphasized the sharia financial economy in line with the vision of Indonesia Gold 2045. Innovations of sharia financial products that integrate between the commercial and social sectors continue to grow, such as cash waqf linked sukuk, cash waqf linked deposit, sukuk valas bank Indonesia, and others.

“This is of course supported by strengthening regulation and institutions, resulting in various developments in the number of institutions and business operators in different sectors of the sharia economy and finance,” Rahmatina said.

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