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Tag: sharia

  • President Jokowi wants Jakarta to become world sharia financial center

    President Jokowi wants Jakarta to become world sharia financial center

    President Joko Widodo (Jokowi) has said Jakarta should aim to become the global sharia financial center as Indonesia has the worlds largest Muslim population.

    “Ive ever conveyed (it) to chairman of the Financial Services Authority (OJK) that it is natural if we make Jakarta as the world sharia financial center,” Jokowi said, at a gathering of stakeholders related to the eight-year issuance of state sharia-based bonds at the state palace here on Friday.

    According to Jokowi, he had heard that an effort to make Jakarta as the world sharia financial center was being discussed by the OJK.

    “We have the potential and power, why we do not use (that), not only sharia financial services such as banks, insurance companies, I think many other things that can be developed, including sharia travel, and halal restaurants,” the president pointed out.

    The president stated that Indonesia should focus on its great market potential.

    “It will trigger economic growth in our country and eliminate issues that often appear such as rumors of 10 million to 20 million Chinese laborers coming into Indonesia, while actually it was only 21,000 of them,” he explained.

    On state sharia-based bonds for the national state budget, the president said that the essence of the budget is that it will be used for the welfare of the people, meaning to eradicate poverty, reduce unemployment, and social inequality.

    “Therefore, the government uses various ways to strengthen the state budget such as strengthening the tax base for instance through the tax amnesty, state sharia securities (SBSN) or the state bonds,” he disclosed.

    The president also declared that Indonesia should be proud that it is the issuer of the largest state bonds in US dollars.

    Up to November 2016, the issuance of SBSN in the international market reached US$10.15 billion with outstanding US$9.5 billion.

    “This means that we have huge potential and it plays an important role in the development and improvement of the welfare of the Indonesian people,” he cited.

    The president further said that Indonesia has a variety of sharia-based bonds (Sukuk), so there are many alternatives to invest.

    Jokowi also pointed out that in 2015 and 2016 as much as Rp20.8 trillion of Sukuk has been used to construct railway lines, including bridges that are beneficial for the people.

    “Then (the sukuk) is also to construct facilities of higher learning institutes and rehabilitate various buildings including those for preparation of Hajj Pilgrimage rituals” Jokowi added.

  • Assets of sharia banks increase to Rp305.5 trillion

    Assets of sharia banks increase to Rp305.5 trillion

    The assets of sharia banks rose 18.49 percent year-on-year to Rp305.5 trillion by July, 2016 on growing third party funds.

    Third party funds held by sharia banks rose 12.54 percent to Rp243 trillion in the same period, Chairman of the Board of Commissioners of the Financial Service Authority (OJK) Muliaman Hadad said in a news release received here on Sunday.

    “The rise in third party fund resulted in an increase of 7.47 percent in sharia financing to Rp220.1 trillion from Rp204.8 trillion,” Muliaman Hadad said at a seminar on sharia financing in Washington, the United States, organized by the World Bank and the Islamic Financial Services Board.

    The rise in sharia financing contributed to increase sharia share of the banking market to 4.81 percent in July, 2016 from 4.6 percent in July 2015. The market share rose to 5.13 percent if conversion of the Aseh Development Bank to Sharia bank was taken into account.

    Muliaman said sharia finance could be an instrument to achieve Sustainable Development Goals (SDGs) as called for by the United Nations.

    “The typical principles of sharia finance which give emphasis on equitable income and is oriented to environmental social activities, make development of sharia financial system very relevant with the SDGS goals,” he said.

    Sharia finance covers not only poverty aspect but also health care, education, gender equal treatment, infrastructure development, economic development, anticipation of climate change, etc, he said.

    He said sharia banking industry has grown in Indonesia as indicated by the decline in Non-Performing Financing (NPF) ratio to 4.81 percent by July 2016.

    Return on Assets (ROA) rose to 1.06 percent by July, 2016 from 0.91 percent by July 2015. As for the ratio of operating cost to operating income has improved to 92.78 percent from 94.19 percent.

    In addition, there was an increase in capital adequacy of sharia banks as reflected in the Capital Adequacy Ratio (CAR) to 14.86 percent in July 2016 from 14.47 percent last year.

    The assets of sharia non bank finance industry rose 23.18 percent to Rp80.1 trillion by July 2016.

    Global sharia bonds contributed 23.3 percent or US$10.15 billion to the total value of international sovereign bonds.

    Indonesia is the first country to issue sharia retail bonds.

    Muliaman said sharia capital market could also play a significant role in financing the governments infrastructure projects.

    Separately a member of the OJK board of commissioner Firdaus Djaelani said in Semarang, the country had sharia banks, 22 conventional banks having sharia units and 165 sharia people financing banks.

    Firdaus said based on data in September, 2016, there were 36 investment managers issuing sharia mutual fund (Reksadana), 12 securities companies issuing sharia on line trading system, 326 issuers and public companies with sharia shares and 51 series of corporate sharia bonds and 53 series of state sharia bonds have been issued.

    Assets in sharia products in the stock exchange were valued at Rp3,272.84 trillion consisting of market capitalization of sharia shares, sharia mutual funds and corporate sharia bonds.

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  • Sharia Finance Sees Promising Future

    Sharia Finance Sees Promising Future

    The Financial Services Authority (OJK) says that the sharia finance still sees promising future despite the slowing down of global economic growth.

    “I’m optimistic on the promising future of the sharia finance industry. However, there will be many challenges and uncertainty,” said Sarjito, OJK Deputy Commissioner for Capital Market Supervision, Thursday, September 29, 2016.

    The challenges and uncertainty include the difficulty in expanding the business in a different jurisdiction that gets hit by local regulations and also the interpretation of sharia itself.

    Sarjito continued, the other challenge is the weak of the sharia finance management and its governance. “The last one is the lack of human resources that are competent enough and having the adequate capacity in sharia finance,” he said.

    The sharia finance industry in Indonesia has shown an unbelievable progress. Based on the report of the Indonesian Islamic Finance, the asset of the sharia finance industry has a 10% growth, and reached Rp617 billion in 2015.

    The number has exceeded the conventional finance asset’s growth. The same trend is also seen in other countries that are also developing the sharia finance.

  • Manulife Indonesia to spin off sharia business unit, increase market share

    Manulife Indonesia to spin off sharia business unit, increase market share

    Manulife Indonesia has submitted a proposal to the Financial Services Authority (OJK) to generate a bigger market share for its holding company by creating a spin-off of its sharia business unit, a company executive has said.

    “We have submitted the documents for the spin-off to the OJK,” Manulife Indonesia’s sharia unit head Yetty Rochyatini said in Jakarta.

    She said the Canada-based company was waiting for the OJK to complete a new regulation on sharia mutual funds, which would be released this year.

    Manulife’s sharia business unit recorded 31 percent growth year-on-year in its risk-based capital to 125 percent in the first quarter of 2016. The government has stipulated that all sharia insurance companies must have a minimum risk-based capital of 30 percent.

    Yetty said the company’s qard (benevolent sharia loan) funds amounted to Rp 240 billion (US$18.2 million), enough to meet the solvency level needed.

    According to the company’s unaudited financial report, the sharia business unit recorded Rp 25.2 billion of gross premium income in the first quarter of this year, an 84 percent increase year-on-year.

    “While waiting for the OJK to formulate the regulation, we continue to prepare ourselves by enlarging the business size and boosting sales,” Yetty said.

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