Biggest and Potential Market

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Muslim Population in Indonesia

Islamic economics and finance industry has great potential to grow in Indonesia. This is supported by the fact that the Muslim population in Indonesia is the largest majority of Muslims in the world. Approximately 85.2% or a total 199.959.285 of 234.693.997 lives of Indonesian people are Muslims.

The Attitude of Indonesian Muslims towards Islamic Law

Besides the large number of Muslim population, Indonesia has another advantage which is the attitude and lifestyle of the Muslim community in Indonesia is likely to obey the commands of the Qur’an and Sunnah.

A survey from the Pew Research Center ( were contacted 35,000 Muslims around the world and researching their Islamic lifestyle and values. The results showed that Muslims in Indonesia are very obedient to run the five pillars of Islam:  Shahadah, Performing Prayers, Zakat, Fasting, and Hajj Pilgrimage.

Approximately 98% of Indonesian citizens surveyed said they paid tithes every year. This includes the highest number, as in other parts of the Islamic world the average percentage of people who regularly tithe less than 80%.

Masjids in Indonesia are always crowded as well, with the attendance rate among the highest in the world. The Pew survey is revealing that 72% of Indonesian citizens surveyed praying at a mosque at least once a week while a similar survey gives the figure of 61% in Egypt, 57% in Malaysia and 44% in Turkey.

The phenomenon of the Muslim Community Middle Class Growth in Indonesia

One of the interesting phenomena in Indonesia is an increasing number of middle-class people from 37% in 2004 to 56.7% of the total population in Indonesia in 2013, The middle class are the ones who spending money per day with a range of two dollars or equivalent to IDR 22 .756 (with a dollar exchange rate of 1: Rp11.378) to 20 dollars. (Source: The Book “A Decade of Building For People’s Welfare” published by United Indonesia Cabinet Secretariat).

It is estimated that approximately 130 million people in Indonesia is a middle class, with spending more than IDR 130 trillion per month. (Source: SWA Magazine)

The middle class community in Indonesia is growing rapidly. In addition to the impact of increased consumption the growth of this community also have an impact on industry and financial services, particularly in banking. Currently the number of the middle class segments of  Indonesia society reached 50 million people. In the future, the trend of an increasing number of the middle class segments of Indonesian society will continue.

The Behavior of the Middle Class Muslim Community

Based on Yuswohady research in his book “Marketing to the Middle Class Muslim” it is known that during the last 5 years the market of middle-class Muslim in Indonesia has experienced a revolution marked by a fundamental shift in behavior.

Indonesian Muslim community grew into a middle class society other than getting rich is also increasing its tendency to run an Islamic lifestyle. (

This can be characterized by following points 6

1. Islamic Bank Booming. Islamic bank in Indonesia is growing incredible reach nearly 40% each year, much exceeding from the growth of conventional banks that less than 20%.

2. Hijab is Being Lifestyle. The last few years the phenomenon of “Hijab Revolution” occurred in the country in tremendous scale. Suddenly dressed in hijab became a lifestyle trends (fashion, cosmetics, accessories).

3. Halal Cosmetics more loved and loved. In a short time these Muslim cosmetics market shifted from niche market to mainstream market.

4. Routine Umrah. Hajj queue period in Indonesia could reach a dozen years. Umrah (every three years, even every year) has now also mostly found among Muslim families in the country. A total of ¼ the number of pilgrim tourists in the Holy Land are from Indonesia. Middle-class Muslims in Indonesia are willing to spend tens of millions of dollars for Umrah.

5. The emergence of Muslim entrepreneurs community. Muslim Entrepreneurship is a hot trend in the country the last few years. Its driver is a Muslim entrepreneur communities which are popping up across the country.

6. Muslim societies eagerly more charitable. Zakat and charity which accommodated in Amil Zakat Institute (LAZ) and the Agency for Zakat (BAZ) has been largely derived from the middle-class Moslem. Its potential continues to grow from year to year. Interestingly, More than 90% people pay zakat via electronic channels.

The Impact of Middle Class Muslim Society Growth

The impressive progress of Islamic banking annual assets that reached averaged more than 65% in the last five years. This increase in Islamic banking assets exceeded growth in assets of the banking industry (commercial banks) which growing 16.23%.

Over the last 5 years (2007-2012), the average rate of Islamic insurance industry asset growth in Indonesia reached 55.13%. At the end of 2012, the growth rate in Indonesian Islamic insurance assets amounted to 42.02% where the general Islamic insurance and reinsurance companies has a higher growth rate than the conventional insurance company in the amount of 67.83% and 35.19%

Indonesia has become the biggest Islamic micro finance country in the world. The reason, Indonesia already has 5500 BMT (Islamic micro finance institution) and 22 thousand BMT outlets.

The total amount of multi financing in the first quarter 2013 is IDR 312.9 trillion. The value of multi sharia financing accounted for approximately 7.37% of the total multi finance finance companies overall.

As of March 2013, there were 321 Islamic stocks contained in the List of Islamic Securities (DES). 321 shares of sharia,

In the last decade, Islamic mutual funds showed significant development. In 2003 there were only 4 products Islamic mutual funds and increased to 58 Islamic mutual funds in 2013 As of March 2013, there are 16 Islamic mutual funds product mix, eight syariah fixed income mutual funds, stock mutual funds sharia 13, and 20 Islamic mutual funds with a total asset value terproteks net (NAV) 8.5 Trillion Rupiah.

Since it was first published in 2002 to the present, corporate Sukuk in Indonesia has been progressing quite rapidly. As of June 2013, there were 61 Sukuk issuances which have been issued by the companies in Indonesia and 38 Sukuk are still outstanding.

The Islamic tourism sector is no less prospective. Muslim tourist visiting to Indonesia reached 1,270,437 people per year.

Increasing number of middle income class people this will affect investment more than the number of consumption. Thus, variation in economic and Islamic financial products and instruments of Islamic investment in Indonesia is in great demand.

Public awareness to consume halal products is also increasing. Middle class Muslim community in Indonesia has become critical and sensitive to halal label. This is facilitated by the proliferation of halal products observer community who continues to provide halal information and reference about a product. Therefore, this is a wide opportunity for Islamic finance to meet the market demand.


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