Jakarta, 30 January 2023 - The growth of Islamic banking financing has managed to outperform the growth of the conventional banking industry. This can be seen from data from Bank Indonesia (BI) in November 2022 which recorded that Islamic bank financing shot up 23.5% year on year (YoY). Nevertheless, the growth of Islamic banking in Indonesia is relatively slow when compared to other countries. Even though Indonesia is a country with the largest Muslim population in the world, which is around 231 million.
One of the challenges of Islamic banking in Indonesia is the level of product competitiveness. The National Sharia Council-Indonesian Ulema Council (DSN-MUI) has issued a Fatwa to respond to developments in product innovation in the global market by utilizing murabahah commodities.
"If we compare murabahah commodity contracts in Malaysia and Indonesia, sharia commodity transactions in Indonesia only reach <1% compared to Malaysia. Therefore, ICDX encourages Sharia commodity transactions as an alternative to Sharia financial instruments in Indonesia, so that Sharia banking can grow rapidly and compete with conventional banks even in the global market," said ICDX Main Director, Nursalam at the Asbisindo 2023 Annual Seminar in Batam (28/ 1).
As the only Commodity Exchange that has obtained permission from the Commodity Futures Trading Supervisory Agency (BAPPEBTI)-Ministry of Trade to organize the Sharia Commodity Murabahah market, currently, ICDX has carried out Sharia commodity transactions for subrogation and asset sale.
Subrogation and asset sale are the transfer of receivables rights from old creditors to new creditors who pay these receivables to old creditors. One of these transactions can be used to support the development of the multi-finance industry which has limited liquidity.
For example, conventional multi-finance can provide financing for 3-4 months, then it is transferred to a conventional bank and the funds obtained can be channeled back to new financing. This is by Fatwa No. 104 of 2016 issued by the DSN-MUI concerning Subrogation Based on Sharia Principles which states that the transfer of receivables is not permitted to be paid in cash, so payments must use goods or commodities.
In this activity, Asbisindo, an association of Sharia Banks in Indonesia, also officially cooperates with ICDX to develop the Sharia market share in Indonesia. This collaboration was marked by the signing of a memorandum of understanding by Herwin Bustaman, Secretary General of Asbisindo and Sharia Director of Bank Permata, and Nursalam, Main Director of ICDX, and witnessed by Hery Gunardi, General Chair of Asbisindo and President Director of Bank Syariah Indonesia.
ICDX hopes that through this collaboration more and more Islamic banks will utilize murabahah commodities as an alternative to Islamic finance. Currently, the value of financing using murabahah commodity contracts in Islamic banking in Indonesia has only reached 785 billion. Meanwhile, if we look at neighboring countries, namely Malaysia, until 2022 financing using murabahah commodity contracts has reached 1,441.9 trillion. Given its large population and positive credit growth, Indonesia has a great opportunity to lead the market share of Islamic banking in the global market.
“We have also obtained a sharia compliance license from DSN-MUI in 2019 and its activities are overseen by the Sharia Supervisory Board. So that Sharia commodity transactions through ICDX are guaranteed to be secure and by Sharia principles," concluded Nursalam.
About Indonesia Commodity & Derivatives Exchange (ICDX)
The Indonesia Commodity & Derivatives Exchange (ICDX) is a commodity and derivatives exchange based in Indonesia. ICDX's vision is to become a global market exchange that improves national welfare, with a mission to become a benchmark for setting world commodity prices through Indonesian primary products. ICDX is an exchange supported by its members consisting of brokers and traders regulated by BAPPEBTI. ICDX members facilitate customer transaction services which include ICDX commodity futures trading contracts. Trades on ICDX will be settled, guaranteed, and cleared by the Indonesia Clearing House. For more information, please visit www.icdx.co.id
For more information, please contact:
External Communications & Affairs
Midpoint Place, 22nd Floor, K.H. Fachrudin Street No. 26, Tanah Abang, Central Jakarta