Indonesia's Largest Islamic Bank to Be Ready by February

[Indos]

Indonesia's Largest Islamic Bank to Be Ready by February

BY :NOVY LUMANAUW & JAYANTY NADA SHOFA

JANUARY 25, 2021

President Joko Widodo delivers a speech during the APEC Summit held through video conference on Nov. 19, 2020. (Photo Courtesy of the State Secretariat)


Jakarta. President Joko "Jokowi" Widodo recently announced Indonesia will soon have its largest Islamic bank, Bank Syariah Indonesia or BSI, to catch up on its sharia economy lag.

BSI is a merger of three state-owned Islamic banks, namely Bank BRI Syariah, Bank Syariah Mandiri, and Bank BNI Syariah. Despite being the world's largest Muslim population, Indonesia is still falling behind in sharia economy. This bank becomes Indonesia's strategy to reap its full potential.

"We have to strengthen our sharia finance industry by establishing the largest sharia bank in Indonesia. It is targeted for completion by February," Jokowi said at the State Palace in Jakarta on Monday.

The president highlighted sharia economy development is not only limited to Muslim-majority populations, but also countries such as Japan, Thailand, UK, and the US.

"We have to seize this opportunity by accelerating the development of the national sharia economy and finances. We must prepare ourselves as the world's center for the sharia economy."

But to this end, there are still many things to work on. According to Jokowi, the country's sharia economy literacy index stands at a low 16.2 percent. The government also needs to work on the halal value chain in the real sector which supports micro, small and medium enterprises (MSMEs) and creative economy development.

In addition, the government will develop more micro waqf banks in several locations. They will also strengthen bodies that handle obligatory alms, charities, and waqf to support the people's economy.

"Sharia economy still holds enormous potential," Jokowi said.

On a separate occasion, State-Owned Enterprises (SOE) Minister Erick Thohir hopes BSI can enter the world's top 10 Islamic banks by 2025. BSI has an asset of Rp 239.56 trillion (around $17 billion), making it one of the largest banks in Indonesia.

"This will become a competitive value when competing with other banks," Erick said on Friday, as quoted by local media Bisnis.com.

As of December 2020, BSI's third-party funds were at Rp 209.98 trillion. The bank reached Rp 156.5 trillion on the financing side, with a capital of Rp22.6 trillion and net profit of Rp2.19 trillion.

"[If there are no unexpected obstacles], BSI can enter the world's top 10 largest Islamic bank based on the market capitalization in the next four or five years," BSI chief director Hery Gunardi said.

Indonesia's Largest Islamic Bank to Be Ready by February

Indonesia has merged three state banks -- Bank BRI Syariah, Bank Syariah Mandiri, Bank BNI Syariah -- to catch up on its sharia economy lag.

jakartaglobe.id

 

[Menthol]

Interest is evil.

But taking a huge profit margin is also evil.


Islamic bank should be a bank that is willing to lose but for the benefit of humanity.

Bearing the name of religion, it should not be done anything evil, but fully charity.

Even though they should take care of themselves for survival.


Doing evil in the name of religion, the sin is much much greater than doing the same sin but no religious name is mentioned.

It's one of the biggest sins.

Because when we talk about religion, what you mentioned is God and Holy Persons, definitely we don't want to do anything wrong with them.

God and Holy Persons are not just good and kind people, but far beyond it.


But if the bank is founded and run righteously, I don't think it's a bad thing.

The world needs such a bank, to be a light in the dark world of the End Times era.

 

[nufix]

Interest is evil.

But taking a huge profit margin is also evil.


Islamic bank should be a bank that is willing to lose but for the benefit of humanity.

Bearing the name of religion, it should not be done anything evil, but fully charity.

Even though they should take care of themselves for survival.


Doing evil in the name of religion, the sin is much much greater than doing the same sin but no religious name is mentioned.

It's one of the biggest sins.

Because when we talk about religion, what you mentioned is God and Holy Persons, definitely we don't want to do anything wrong with them.

God and Holy Persons are not just good and kind people, but far beyond it.


But if the bank is founded and run righteously, I don't think it's a bad thing.

The world needs such a bank, to be a light in the dark world of the End Times era.

Islamic bank should be willing to lose? How tf should they pay wages and keep the lights on? And who says sharia bank should not make money?

Sharia banks, while not profiting from interests, are profiting from mudharabah or profit sharing, much like investment banking that deals with equity and performance based profit orientation rather than borrowing.

Meanwhile, sharia banks also profit from Murabahah where the bank is contracted to buy something by a customer and the bank sells it to the customer at a higher price to create profit. This works in the same manner as interests do minus the sins of course.

Sharia bank, while bearing the name of sharia, is still a bank. An institution created to print money in literal and non literal sense. You cant expect them to be charitable. I wouldn’t put my money to a bank that is charitable since it is my money that they are going to give away.

 

[Indos]

They already have logo and official Youtube channel. Very nice.......

 

[powastick]

Islamic bank should be willing to lose? How tf should they pay wages and keep the lights on? And who says sharia bank should not make money?

Sharia banks, while not profiting from interests, are profiting from mudharabah or profit sharing, much like investment banking that deals with equity and performance based profit orientation rather than borrowing.

Meanwhile, sharia banks also profit from Murabahah where the bank is contracted to buy something by a customer and the bank sells it to the customer at a higher price to create profit. This works in the same manner as interests do minus the sins of course.

Sharia bank, while bearing the name of sharia, is still a bank. An institution created to print money in literal and non literal sense. You cant expect them to be charitable. I wouldn’t put my money to a bank that is charitable since it is my money that they are going to give away.

Interest is evil.

But taking a huge profit margin is also evil.


Islamic bank should be a bank that is willing to lose but for the benefit of humanity.

Bearing the name of religion, it should not be done anything evil, but fully charity.

Even though they should take care of themselves for survival.


Doing evil in the name of religion, the sin is much much greater than doing the same sin but no religious name is mentioned.

It's one of the biggest sins.

Because when we talk about religion, what you mentioned is God and Holy Persons, definitely we don't want to do anything wrong with them.

God and Holy Persons are not just good and kind people, but far beyond it.


But if the bank is founded and run righteously, I don't think it's a bad thing.

The world needs such a bank, to be a light in the dark world of the End Times era.

No Islamic Bank will not take the loss. Instead they have higher interest rate compare to average bank to compensate and they don't call it interest, they call it profit sharing. During the early days they have fixed rate, which is beneficial if the interest fluctuates higher but don't benefit when central bank lowers the interest rate (Base Lending Rate). But it is unpopular as most Malays prefer commercial banks borrowing, cause is way cheaper and people don't see interest rate climbing soon. 1% in difference in interest rate is a lot if your loans is over 20-30 years. But these days Islamic bank are using National Bank interest rate which fluctuates which makes me wonder are they Islamic enough?

 

[Indos]

No Islamic Bank will not take the loss. Instead they have higher interest rate compare to average bank to compensate and they don't call it interest, they call it profit sharing. During the early days they have fixed rate, which is beneficial if the interest fluctuates higher but don't benefit when central bank lowers the interest rate (Base Lending Rate). But it is unpopular as most Malays prefer commercial banks borrowing, cause is way cheaper and people don't see interest rate climbing soon. 1% in difference in interest rate is a lot if your loans is over 20-30 years. But these days Islamic bank are using National Bank interest rate which fluctuates which makes me wonder are they Islamic enough?

The interest in Islamic bank of course fluctuate. If it is fixed, it is not Islamic bank. The interest based on the business performance. What we see now if I put my money to Islamic bank, I will get interest based on bank performance. This is why Islamic bank is the most profitable during recent recession since they dont need to pay interest as much as commercial bank when their financial performance going down due to crisis. Financial system will be more healthy and less fragile if we use Islamic banks (Islamic system).

Actually if I am as a person want to lend some money to another person, making an interest on it is Haram (forbidden). People do ask money during difficulty right ? So it is Haram to make an interest when we lend some one money. But it is an institution that is beneficial for the economy and mostly lend money for businesses and the rest to some one who has already had good and stable income for consumption, not some one who get financial difficulty. There will be less money circulation as well if there is no bank. Banks grow the economy. Any way it is state owned bank, not own by person.

There is actually a verse in Quran that say God forbids compound interest and the other verse forbid some one who make an interest to another person. If I am about to interpret it, bank as institution can get away from being regarded as Haram as long as the interest is low and it is beneficial for the economy ( make money keep being circulated from some one who cannot grow it into some one that can grow it ).

“O believers, take not doubled and redoubled interest, and fear God so that you may prosper.” (Surah Al ‘Imran, verses 130-1)

And when the bank is even state owned so I would say it is difficult to regard it as forbidden activity, it is because government has right to tax their citizen if they have good income and profitable businesses. Islam also doesnt forbid government to tax their citizen, rather Islam shows that people should pay zakat and even do more than just zakat that benefit other people and society.

 

[powastick]

The interest in Islamic bank of course fluctuate. If it is fixed, it is not Islamic bank. The interest based on the business performance. What we see now if I put my money to Islamic bank, I will get interest based on bank performance. This is why Islamic bank is the most profitable during recent recession since they dont need to pay interest as much as commercial bank when their financial performance going down due to crisis.

Actually if I am as a person want to lend some money to another person, making an interest on it is Haram (forbidden). People do ask money during difficulty right ? So it is Haram to make an interest when we lend some one money. But it is an institution that is beneficial for the economy and mostly lend money for businesses and the rest to some one who has already had good and stable income for consumption, not some one who get financial difficulty. There will be less money circulation as well if there is no bank. Banks grow the economy. Any way it is state owned bank, not own by person.

There is actually a verse in Quran that say God forbids compound interest and the other verse forbid some one who make an interest to another person. If I am about to interpret it, bank as institution can get away from being regarded as Haram as long as the interest is low and it is beneficial for the economy ( make money keep being circulated from some one who cannot grow it into some one that can grow it ).

“O believers, take not doubled and redoubled interest, and fear God so that you may prosper.” (Surah Al ‘Imran, verses 130-1)

And when the bank is even state owned so I would say it is difficult to regard it as forbidden activity, it is because government has right to tax their citizen if they have good income and profitable businesses and Islam also doesnt forbid government to tax their citizen, rather Islam shows that people should pay zakat and even do more than just zakat that benefit other people and society.

It is fixed for consumer loans 10 years ago but they change towards flexible interest profit sharing, but i don't know when it happen. Sure they have different rates, but the rate is fixed after the loan is borrowed because the payment must be fixed amount. I have to admit, I'm not familiar with Islamic business loans during that time although is part of our test papers questions. But if Islamic banking were cheaper than commercial banks, most banks today in Malaysia would be dominated by Islamic bank. Compound interest is bad, but it means little if the borrowing cost is high after you done all the math.

 

[Indos]

BSI Dominates Sharia Market Share in Indonesia
Friday, 03 September 2021 | 06:50 WIB

Reporter: Maizal Walfajri | Editor: Rizki Caturini

KONTAN.CO.ID - JAKARTA. In fact, Islamic bank financing is still growing even though the pandemic has suppressed the demand for bank credit in the industry. The Financial Services Authority (OJK) recorded that the financing of Islamic commercial banks (BUS) and conventional bank sharia business units (UUS) grew by 7.25% year on year (yoy) to Rp 394.94 trillion in semester 1-2021.

The surge in financing has made the assets of the Islamic banking industry soar 15.87% yoy to Rp 616.19 trillion as of June 2021. PT Bank Syariah Indonesia Tbk (BRIS) of course dominates the market share of the Islamic banking industry. Understandably, BSI is a merger of three state-owned Islamic banks, namely Mandiri Syariah, BNI Syariah, and BRI Syariah.

BSI also has a jumbo market capitalization of Rp 88.01 trillion on the stock exchange. In comparison, the market capitalization of other Islamic banks listed on the stock exchange, namely BPTS Syariah, is only IDR 21.87 trillion.

BSI President Director Hery Gunardi said that a number of financing segments such as consumer, Micro, Small and Medium Enterprises (MSMEs) and commercial are expected to have the opportunity to grow until the end of the year.

BSI managed to disburse Rp 161.5 trillion in financing, up 11.73% yoy. Meanwhile, net profit was Rp 1.48 trillion, up 34.29% yoy in semester 1 2021.

Bank Muamalat's second largest asset is Rp 215.74 trillion. However, the profit of the first Islamic bank in the country fell slightly on an annual basis to Rp 4.90 billion from Rp 4.94 billion.

Meanwhile, PT Bank BCA Syariah is in fourth position with assets of Rp. 8.51 trillion. Director of BCA Syariah Rickyadi Widjaja stated that he would pursue asset growth of 5% to 10% throughout 2021. The asset growth will be obtained from financing distribution and placement of bank funds in securities.

"Financing until the end of the year is not far from now because activity restrictions that have been extended since July will greatly affect the target for providing new financing in July and August 2021," said Ricky, Thursday (2/9).

Ricky projects that BCA Syariah financing can reach Rp 5.9 trillion or grow 3% to 5% yoy throughout 2021. He hopes that the demand for refinancing will swell in the fourth quarter as Covid-19 cases can be controlled and the economy will get back on its feet.

He saw that the financing sector could still be relied on from the plantation and palm oil industries along with the increase in crude palm oil (CPO) prices. Then financing to finance, logistics and transportation, pharmaceuticals, food and beverages, to the paper and tissue industry.

Meanwhile, Director of Bank Permata Syariah Herwin Bustaman projects financing to grow double digits throughout 2021. “We continue to focus on financing for corporate customers, especially SOEs and retail through KPR iB. Until June 2021, our financing has grown by 6% compared to December 2020, with the largest contribution from retail and corporations," said Herwin to KONTAN on Thursday (2/9).

BSI Merajai Pangsa Pasar Syariah di Tanah Air

Pembiayaan bank syariah cukup kebal dari efek pandemi

insight.kontan.co.id

 

[Indos]

State owned banks dominate Indonesian banking system whether Islamic or not Islamic banks

Here is 10 major banks in Indonesia by assets

Bank Rakyat Indonesia (first biggest-state owned), Bank Mandiri (second biggest-state owned), BCA (third biggest-private/public owned), Bank Negara Indonesia (forth biggest-state owned), Bank Tabungan Negara (fifth biggest-state owned), Bank Shariah Indonesia ( 7 biggest-state owned ) Bank Tabungan Pensiunan Nasional (ten biggest-state owned). The rest banks that are not mentioned are foreign owned

Top 10 banks are really dominating the national economy.

 

[MH.Yang]

Indonesia is the greatest hope of the Islamic world. They have enough resources and population, and they are more pragmatic.
I even believe that Indonesia will surpass Japan and India to become the third largest economic power in the world in 2050.

 

[Indos]

Indonesia is the greatest hope of the Islamic world. They have enough resources and population, and they are more pragmatic.

I even believe that Indonesia will surpass Japan and India to become the third largest economic power in the world in 2050.

Thank you for your optimistic view on my nation. Currently my government spends more on infrastructure, primary and higher education, vocational training, and village fund. Infrastructure is very important as even main islands like Java and Sumatra which are the engine of the economy still lack of infrastructure. Regarding education field, this is necessary to make industry whether coming from Domestic Investment or Foreign (FDI) can get skillful workers, managers, strategic thinkers, and leaders. Our current universities orientation to stress on entrepreneurship is also a good policy. While about village fund which absorbs substantial government budget, it is IMO necessary to spread economic development into village level, so not only city people who can see development in their own region.

Current administration also make several important structural reforms. I am optimistic about Omnibus Law that is very pro business and has been passed just recently. Derivative laws have also been created to implement the law and I see it as quite helpful to accelerate businesses, particularly whIch is still in start up level and doesnt have big initial capital.

I think the greatest weakness of Indonesia is in R&D. I do hope after we once again inshaAllah get another new leader in 2024 (Jokowi cannot run again based on our constitution), we could get young leader with understanding about the important of R&D. Honestly, I dont have high hope with our older generation leaders. Jokowi should be the last taken from older generation.

Our research agencies people have already bluntly said the lack of finance as the prominent hurdles that make them cannot grow their expertise fast enough and develop more programs. Other thing that I see as our weakness in this area is short term orientation in doing R &D program. They want to make program that can get faster result while long term program could be jeopardized if new leader comes. We will, for example, see whether KF 21/IFX program can be really supported by this administration financially or not......

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This is the current state in term of R&D and India is still much better than Indonesia

How much does your country invest in R&D?

Global spending on R&D has reached a record high of almost US$ 1.7 trillion. About 10 countries account for 80% of spending. See how much your country is investing and how it compares to others around the world.

uis.unesco.org

 

[Indos]

A customers stands inside the office of Syariah Mandiri Bank in Jakarta on Oct. 14, 2020. (Antara Photo/Rivan Awal Lingga)


Indonesia Controls 23% of Global Sharia Bonds Issuance: Finance Minister
BY :TRIYAN PANGASTUTI
OCTOBER 26, 2021

Jakarta. The Indonesian government claimed on Tuesday it has controlled 23.11 percent of global sharia bonds market by issuing a total of $23.65 billion worth of the Islamic bonds.

Over the past few years, the government has been aggressively issuing the Islamic financial certificate, known also as Sukuk, which was relatively resilient to the economic impact of the Covid-19 pandemic.

“Indonesia has become a major issuer of Sukuk in the international markets. The total value of our Sukuk is $23.65 billion with a 23.11percent share of the global Sukuk issuance,” Finance Minister Sri Mulyani Indrawati said in seminar in Jakarta.


Since 2018, the government has issued $3.5 billion worth of Sukuk with competitive returns to investors, she said.

The minister added that shariah-compliant financial businesses remain strong during the pandemic as shown by a persistent growth in sharia bank financing with a low level of non-performing loans.

The rapidly growing Muslim population across the globe has become the main driving force behind the increasing demand for sharia-compliant financial products, now emerge as new attraction to global investors, she said.

An increasingly digitized world and rapid development of the halal industry also spur growth in Islamic financial businesses, she added.

Indonesia has the world’s biggest Muslim population, with Islam followers making up more than 80 percent of its 272 million citizens.

The country has 34 sharia banks with a combined asset of Rp 571 trillion ($40 billion) and more than 1,300 branches across the archipelago, according to the Financial Services Authority (OJK).

Indonesia Controls 23% of Global Sharia Bonds Issuance: Finance Minister

Since 2018, the government has issued $3.5 billion worth of Sukuk with competitive returns to investors.

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