The Jakarta Post

Jeddah-based IDB sets up business forum in Indonesia

On monday, Islamic Development Bank (IDB) Group opened its office of business forum (thiqah) at the Investment Coordinating Board (BKPM) in Jakarta. Since this is the bank's first office beyond the boundaries of Saudi Arabia, it is expexted that it will contribute to IDB's expansion and mobilization of its resources and promotion of Indonesia as a major investment destination for IDB's members. This move will enable a connection between Indonesia and investors from other Muslim countries, thus taking advantage of the rapidly growing Islamic economy.

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Sharia loans likely to get own LTV limit

Sharia banks in the country will soon be subject to Bank Indonesia’s new policy regulating minimum down payments for housing and automotive loans. However, a deputy governor for the central bank says that they may have different limits than those for commercial banks. This month, BI said that sharia banks would soon be included in its policy to restrict loans to value in automotive and housing lending. These had entered into effect for Indonesian commercial banks in June.

Malaysia retains lead in Islamic finance

Malaysia maintains its leading position in Islamic finance having a large volume of Islamic investors looking for syariah-compliant investments like sukuk compared to Singapore. The huge number of Muslim-owned companies in Malaysia is one of the most significant reasons for the high demand for syariah-compliant financing and sukuk issuance. 60 percent of global sukuk deals are concluded in Malaysia.

Indonesia: Embracing the growth of Islamic finance

Indonesia is seeking to further develop its Islamic banking sector, looking to tap into the growing market for sharia-compliant financial instruments, though it still has some way to go before being able to match the major players in the segment.

Sharia banking grows strong in Indonesia

The people of West Java also showed their support by injecting Rp 106 billion into the bank. Although its business was not too bright in its early days, the bank recorded a profit of Rp 372.5 billion in the second quarter of 2009. The achievement of Bank Muamalat is proof of the great potential of sharia banking in Indonesia. Sharia banking is based on Islamic law.

Bank Indonesia data reveals there are currently five sharia banks operating in the country, namely Bank Syariah Mandiri, Bank Muamalat Indonesia, Bank Syariah Mega, Bank Syariah Bukopin and Bank Syariah BRI. Twenty-six other banks have sharia banking units, such as Bank Permata, Bank BNI, Bank CIMB-Niaga, Bank Danamon and BPD DKI.

The Acting Governor of Bank Indonesia said that banks based on Islamic law are predicted to enjoy further growth in 2010. Darmin added that sharia banks would continue to flourish due to the organic growth within existing banks and the establishment of new sharia banks and unit.

ADB, IDB setting up Islamic fund to finance infrastructure

To speed up the development of infrastructure projects, the Asian Development Bank (ADB) and the Islamic Development Bank (IDB) have agreed to set up Asia's first major multi-country USD 500 mn Islamic infrastructure fund.

The 12 targeted countries are Afghanistan, Azerbaijan, Bangladesh, Indonesia, Kazakhstan, Kyrgyz Republic, Malaysia, Maldives, Pakistan, Tajikistan, Turkmenistan and Uzbekistan.

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