JAKARTA (Yosefardi) – The Financial Services Authority (OJK) mulls to to ease foreign ownership limits for local Islamic banks. Currently, foreign investors cannot own more than 40% of local Islamic banks.
Despite having the world’s largest Muslim population and being a dynamic emerging economy, Indonesia plays only a very minor role in the global Islamic banking industry. Meanwhile, domestically, Islamic banking still seriously lags behind conventional banking.
However, although still small compared to the country’s conventional banking industry, Indonesia’s Islamic finance industry has been growing rapidly in recent years on the back of growing awareness of Islamic banking and government support.
Between the years 2010 and 2014, Indonesia’s Islamic banking assets grew from Rp100 trillion (US$8 billion) to Rp279 trillion (US$22.3 billion), or at a compound annual growth rate (CAGR) of 29.2%.
Meanwhile, Indonesian conventional banking assets expanded much slower at a CAGR of 16.9% over the same period (2010-2014).
OJK had developed and launched a five-year roadmap earlier this year, which aims to triple the market share of Islamic banks to 15% by 2023.