Bank Indonesia headquarters in Jakarta
Whilst they are still strides away from the volume of Islamic investment seen in neighbouring Malaysia, Indonesia still has the largest number of Islamic financial institutions in the world. Despite being home to ten percent of the world’s Muslim population, Indonesia has so far held back, but Indonesia’s government is hoping new Islamic finance laws will entice foreign investment in the growing sector and secure a share of the $US700 billion global Islamic finance market.
« We do have three fully fledged Islamic banks, and about 25 Islamic divisions of conventional banks, and we have around 106, or 110 Islamic rural banks, » Dr Muhammad Syafii Antonio, from the Central Bank of Indonesia, recently declared. « So in terms of players, Indonesia is bigger, and in terms of market Indonesia is promising, so Indonesia is too big to be ignored. »
The Indonesian government is hoping that new laws will attract investment from the Middle East, and Dr Antonio says with the new changes in legislation, the share of Islamic investment on Indonesia’s national bond market could increase to 5 percent within the next two years.