REPUBLIKA.CO.ID, SURABAYA -- Bank Indonesia (BI) highlighted the still low contribution of sharia financing in the banking sector, which accounts for only 8 percent. In fact, until July 2024, sharia financing grew 11.9 percent year on year (yoy) to reach Rp 598 trillion.

“Although sharia financing has grown by 12 percent, the share of banking in total is still relatively small, just 8 percent,” Destry said while speaking at FesYAR Java 2024, Friday (13/9/2024).

Destry said the reason for the low contribution of sharia financing to banking is due to the limited number of sharia-based financial instruments in Indonesia. In fact, the growth potential of sharia economy in Indonesia is very large due to the growing number of Muslims.

Today, there are 235 million Muslims in Indonesia. Not only that, 70 percent of them are young people who are very receptive to digital development.

“We are lucky that 70 percent of Indonesia's population is among young people who are very digital savvy. In fact, Gen Z and Alpha wake up to it are already instantly digital,” he said.

Indonesia has also proved its growth in the sharia economy by rising one rank to third after Malaysia and Saudi Arabia in the State of the Global Islamic Economy (SGIE) 2023 report. A year earlier, Indonesia was ranked fourth.

“We must not be satisfied with this achievement. There are still many challenges facing our sharia economy and many are structural in nature,” Destry said.

Therefore, in order to increase the number of sharia instruments in the Indonesian financial market, BI Senior Deputy Governor requested that the Financial Services Authority (OJK) and the Deposit Guarantee Institution (LPS) can work together with BI to create a superior sharia product. The move was also in response from regulators and financial market watchdogs to the demand for sharia products, which is actually very strong.

“We in BI are for open market operations, we are sometimes confused by this lack of underlyings. Until we finally take the global sukuk as the underlying because in Indonesia it is still lacking,” Destry said.

“It's a challenge, let's think together what financial instruments we can develop in the future,” Destry continued.

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