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

Indonesia's Largest Islamic Bank to Be Ready by February


JANUARY 25, 2021

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

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.