Jakarta. Indonesia -- the world’s largest Muslim-majority country -- reported that its Sharia-compliant finance assets had totaled hundreds of billions of American dollars in value.

“As of May 2023, Islamic financial assets in Indonesia reached more than Rp 2,400 trillion or $160.6 billion. This marks a 16.7 percent year-on-year growth,” Mahendra Siregar, the chairman of the Financial Services Authority (OJK), said at the virtual 7th Annual Islamic Finance Conference on Wednesday.

Islamic finance assets market share stood at 10.8 percent of the entire financial landscape. The market share is poised to rise in the years ahead, according to Mahendra. 

The former diplomat told the forum that Islamic finance had proved itself to be resilient in the face of crisis, while also posting higher growth rates compared to its conventional counterpart. This immense potential, however, remains to be fully harnessed.

"So OJK is going to undertake a series of strategic measures, among others, by optimizing the Islamic financing performance through capital strengthening and consolidation. As well as fostering synergies and encouraging a competitive and vibrant industry,” Mahendra said.

He added: “[Other measures include] applying a sharia governance framework and establishing the Islamic finance development committee."

OJK pushes for Islamic social funds to finance micro, small, and medium enterprises (MSMEs). Mahendra said that such financing was pivotal to promoting the country’s sharia financial inclusion, which was still very much lacking.

Indonesia has an Islamic financial inclusion index of only 12.1 percent despite Muslims accounting for 87 percent of its total population. In other words, not many Indonesians are able to access useful and affordable sharia-compliant financial services. Only a few people also have the knowledge and skills to manage money within the principles of Islam, as marked by a literacy index of just 9.1 percent. 

This is a stark contrast to the overall financial inclusion and literacy indexes, which reached 85.1 percent and 49.6 percent, respectively, according to OJK. 

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