Badlisyah Abdul Ghani, Jakarta
Indonesia, the sleeping giant of Islamic finance, has finally awakened. Now that its laws on sukuk (akin to bonds) and sharia banking are firmly in place, the country has sent a clear signal to the financial world it is serious about developing the Islamic financial market here.
It has also joined an exclusive club of countries — the other member being Malaysia — that is pushing the industry’s development through statute.
With a proactive Indonesian government, many initiatives can now be implemented to drive the Islamic finance industry’s expansion. The new political will and commitment shown by the Indonesian government toward the industry is very exciting to market players, many of whom will now see Indonesia as a viable place to transact Islamic banking and finance business.
Indonesia, which has the largest Muslim population in the world and the largest economy in Southeast Asia, has the potential to become the largest indigenous Islamic financial market and, in particular, the largest Islamic debt capital market in the world.
Of course, in order to really develop the industry, it is not enough to simply pass the enabling laws for the government to issue sukuk and for banks to engage in sharia banking. This is an excellent beginning, but more needs to be done.