Jakarta (VNA) – Indonesia has potentialto become one of the main players in the Islamic finance industry (Sharia),said head of the National Development Planning Board Bambang Brodjonegoro.
Bambang said one way of increasing thepotential is to make easy access for clients to financing by Sharia banks orother Sharia financing agencies through synergy with financial technology(Fintech) institutions.
The presence of Sharia banking reducesrisks as every transaction needs underlying assets. Besides, with the strongpresence of sharia banking, there would always be new entrepreneurs or smallbusiness players involved in halal industry which in long term, helping pushthe growth of Sharia economy in Indonesia.
Currently, Indonesia is still lagging behindMalaysia and the United Kingdom in the Sharia finance industry with Shariabanks having only a 5 percent share of the banking market in the country.
In addition, Indonesia’s halal productsare still not competitive in the international market.
Meanwhile, Head of Islamic Finance of theWorld Bank Abayomi Alawode emphasised the importance of increase in Shariafinancial role to cope with economic gap and strengthening sustainability ofgrowth.
Therole could be strengthened by making use of financial technology which is nowgrowing fast; giving access to financing to businesses, financinginfrastructure, approaching financial services and investment in the educationsector, Abayomi said.
However, a number of risks need to bemitigated from technology innovation development such as uncertainty ofregulation, cyber security risk and exploitation of consumers possible as a resultof data stealing, he noted.-VNA
VNA