Indonesian President Joko Widodo last week inaugurated the National Committee for Shariah Finance (KNKS), as part of the country’s bid to become a global hub for Islamic finance.
There are more than 225 million adherents of Islam in Indonesia, or around 12.7% of the total global Muslim population, making it the world’s largest Muslim-majority country.
National Development Planning Minister and KNKS general chairman Bambang Brodjonegoro said in a statement: “KNKS has a mandate to accelerate, expand, and develop shariah-compliant financial services to support the country's development.”
The KNKS is not a government agency, but it will play a strategic role in dispensing advice to the government regarding Islamic finance. It will also exercise authority to supervise and evaluate strategic programs being implemented by the industry, the Jakarta Globe reported.
Other members of the committee include the finance minister, the religious affairs minister, the Financial Services Authority chairman, the central bank governor, and the chairman of the Indonesian Ulema Council.
According to government data, Indonesia has the most Islamic finance entities, including 58 takaful (insurance) companies, 34 lenders, seven venture capital firms, 163 rural lenders, and around 5,500 cooperatives.
However, the market share of Indonesia’s Islamic finance sector at 5.3% is still quite behind other countries’ such as Saudi Arabia (51.1%), Malaysia (23.8%), and the United Arab Emirates (19.6%).
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