Indonesia's Islamic market is set to overtake Malaysia's thanks to the growth in Sharia-compliant lending, one of Indonesia's top Muslim clerics said last week.

 

Indonesia currently lags neighbouring Malaysia in terms of the market for Sharia-compliant financial products in the region, but that should change given stronger government support and demand in the domestic market, he said.

 

Ma'ruf Ameen, head of the Indonesian Ulema Council's (MUI) commission in charge of issuing edicts, including on Islamic markets, also said he expected more conventional banks to be turned into Islamic lenders in the near term.

Indonesia's Sharia banking assets accounted for just about $5 billion (Dh18.3 billion), or two per cent of the country's total banking assets in 2008, far lower than in Malaysia where Islamic banking accounted for some $68 billion, or 17 per cent, of total banking assets in late 2008.

"We will be bigger because the potential is much bigger," Ameen said in an interview.

 

"The political will from the government is there; from the president, the ministers. The government has also issued sukuk."

 

The government raised 5.56 trillion rupiah (Dh2 billion) from its retail, Islamic-compliant bonds in February and made a debut sale of $650 million worth of global Islamic bonds in April. Both issues attracted strong demand from investors.

 

Capitalising on the strong potential, several banks including Bank Central Asia, the country's No.. 3 lender by assets, and mid-sized bank Bank Panin, have bought smaller lenders and turned them into Sharia banking units. (Gulf News)