Photo: President Joko Widodo, Vice-President Ma'ruf Amin and Finance Minister Sri Mulyani Indrawati launching the Sharia economy brand in Jakarta on Jan 25, 2021.

Islamic Finance

Indonesia Islamic finance market share to cross 10% barrier with launch of three-way merged bank

JAKARTA – The market share of Indonesia’s Islamic finance industry looks set to cross the 10% barrier next month when the three merged state-owned Shariah-compliant banks start operations.

Islamic assets made up 9.9% of Indonesia’s total financial industry at the end of November last year, Wimboh Santoso, the outgoing chairperson of the non-profit Islamic Economic Society (MES) said during a recent virtual media conference.

This market share comes some three decades since the opening of the country's first Islamic bank, Bank Muamalat, in 1992. 

The Islamic finance industry grew 21.58% during January – November 2020 to 1,770.32 trillion rupiah ($126 billion), much higher than the 13.84% rise for the same period in 2019, said Wimboh.


  • Islamic bank assets 592.35 trillion rupiah
  • Non-bank Islamic assets 113.16 trillion rupiah
  • Islamic capital market assets (corporate sukuk, government sukuk, Islamic mutual funds, excluding Shariah-compliant shares) 1,063.81 trillion rupiah

Despite the high growth last year, market share is still far from the national target of 20%.

“We still face some real challenges in accelerating the Shariah financial ecosystem,” said Wimboh, who is also the chairperson of the board of commissioners of the Financial Services Authority (OJK).

He said the challenges are:

  • low literacy rate (8.93% compared to conventional 38.03%)
  • low inclusion rate (9.1% compared to conventional 76.19%) due to uneducated customers especially in the regions,
  • limited Shariah products
  • a business model that depends too much on murabahah and sukuk financing
  • limited experienced expertise/ human capital within the industry.

Wimboh added that Indonesia’s Islamic finance industry should explore new products and business models such as micro and small enterprise financing through micro waqf agencies.

He also suggested the industry further collaborates with digital players, increase its human capital competency through professional certifications, e-learning, scholarship, industry-themed research, and grow Islamic banking business presence both in the domestic and global market. 

MES welcomes the upcoming February start of Bank Syariah Indonesia, the entity formed as a result of the merger of three state-owned banks.

“We support the effort to increase the capacity of the national Shariah finance industry such as through the state-owned Islamic banks merger. To really make an impact, we shouldn’t do business as usual like we did in the past 20 years,” he added.

Sutan Emir Hidayat, director of Islamic economy supporting ecosystem at the National Sharia Economy and Finance Committee (KNEKS) believes the new merged bank will push Islamic finance market share across the 10% barrier very soon.

The consolidated assets held by the three banks—Bank Syariah Mandiri, BNI Syariah, and BRI Syariah—is around 207 trillion rupiah ($14 billion) and it will be the seventh biggest bank after BRI, Bank Mandiri, BCA, BNI, BTN, and CIMB Niaga, said Sutan.

He believes the “Sharia economy brand”, launched on Monday (Jan 25) by President Joko Widodo, will boost the growth of the Islamic finance industry. The new logo can be used by government bodies and other stakeholders in the Islamic economy for their products, activities and campaigns to show a unified drive for the growth of the industry and increase awareness of it among consumers.

Indonesia Islamic Economy logo launched Jan 25, 2021

Indonesia's Islamic economy logo was launched on Jan 25, 2021 by President Joko Widodo.

(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim

*Correction: In para 2, Wimboh Santoso is corrected as the outgoing chairperson of the non-profit Islamic Economic Society (MES). The position of chair was handed to Erick Thohir, the current minister of state-owned enterprises, at the end of the media conference.

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