Early Development of Islamic Finance in Indonesia
Islamic finance in Indonesia has been running for more than two decades. Not only developed in the banking industry, insurance and capital markets, Islamic finance in Indonesia here to provide solutions for the pawnshop industry, micro finance, multi finance, Islamic tourism sector sharia and Islamic lifestyle industry.
Islamic Finance in Indonesia was marked by the establishment of the first Islamic bank in 1991 for the initiation of MUI and ICMI. The scholars and Muslim intellectuals at the time were initiated to bring the non-interest bank in Indonesia. Through several political lobbying and begins with the Interest Bank and Banking Workshop in Cisarua, Bogor, West Java, on 18-20 August 1990, the first Islamic bank in Indonesia was officially established on 1 November 1991.
Institutional Developments of Islamic Economic and Finance in Indonesia
The establishment of the first Islamic bank sparked the formation of the initiation of Islamic financial institutions and other Islamic business sector. After the signing of the establishment deed on 1 November 1990, the first Islamic bank officially opened on May 1, 1991. Then following the Islamic Insurance industry with the establishment of the first Islamic insurance company on 24 February 2004. From the capital markets sector, July 3 1997 marks the beginning of the development of Indonesian Islamic capital market with the launch of Islamic mutual funds by PT. Danareksa Investment Management and the Indonesia Stock Exchange. Following the Islamic banks that have been formed, some conventional banks also began to establish sharia business unit since 28 June 1999. The development of the Islamic capital market industry is getting hit with the launch of the first Islamic stock index, named Jakarta Islamic Index (JII) on 3 July 2000. On 1 November 1999, another Islamic banks began to emerge in stages following the first Islamic bank lunge.
As of June 2013, the growth of Islamic banking assets reached 40.64% increase from IDR 155.41 trillion in 2012 to IDR 218.57 trillion in 2013 Based on data released by the Financial Services Authority (FSA), until the end of 2012 there are 45 Islamic insurance and reinsurance companies in Indonesia.
Indonesian Islamic Finance Industrial Concern towards Financial Inclusion
The regulator and the Islamic finance industry are also very concerned about the financial inclusion. This can be seen from the great development of the microfinance sector in Indonesia. Indonesia is world largest Islamic Micro Finance because it already has 5500 Baitul Maal (Islamic Micro Finance Institution) with 22 thousand outlets. With a membership of about 762 thousand members and total assets reached IDR 5 trillion – IDR 8 trillion. There are 600 thousands micro enterprises, 200 Cooperative and 5500 BMT in Indonesia.
Islamic Lifestyle Enhancement in The Society
In addition to the financial sector, Islamic finance in Indonesia is also manifest in the form of public awareness of sharia-compliant lifestyle. Indonesia is serious in developing Islamic tourism sector which consists of Islamic Hotel, Islamic Salon and Spa, Halal food and restaurant, as well as Islamic tour and travel services.
One form of seriousness in working on Islamic tourism sector began in May 1994 with the establishment of the first Islamic hotel in Indonesia followed by the establishment of Sharia Indonesian Hotel Association in 2012. In 2013, the government through the Ministry of Tourism and Creative Economy join busy campaigning for Islamic tourism sector. At the end of 2013 established a community called Indonesian Citizen Halal Concerned Citizens Movement.
Islamic Finance and Economic Regulation and Law in Indonesia
Currently, Indonesia has had some Islamic economic acts. Among them is the Act No. 21 Year 2008 on Islamic Banking, Act No. 19 Year 2008 on State Islamic Commercial Paper, Act No. 41 Year 2004 on Endowments, Act No. 23 Year 2011 on Zakat Management.
Industrial economics and Islamic finance in Indonesia fairly obedient in sharia law compliance issues. This is reflected by the DSN – MUI (National Islamic Council of Indonesian Ulama Council) responsible for issuing fatwa references of each transaction in Islamic financial institutions. Furthermore, in every Islamic financial institutions are also Sharia Supervisory Board performs the functions of sharia compliance audit. Currently, SSB in Islamic Financial Institutions has reached the amount of DPS. DSN also has issued fatwa MUI Islamic financial transactions as much as 87 fatwas.
Associations and Organizations Supporting Indonesian Islamic Economic and Finance
Indonesia is also a country with the most comprehensive Islamic economic organization associations. Islamic economics Association in Indonesia include both general and segmented associations.
Association of Islamic economics in Indonesia consists of 3 types namely Islamic Economic Industry Association such as ASBISINDO (Association of Indonesian Islamic Bank), AHSIN (Indonesian Islamic Hotel Association), AASI (Indonesian Islamic Insurance Association of), FOZ (Zakat Forum), ABSINDO (BMT Association All Indonesia), Islamic Economic Professional Association such as IAEI (Association of Islamic Economic Experts), AAKSI (Indonesian Islamic Accounting & Finance Association) and the Community Association such as MES (Islamic Economic Society), PKES (Communication Center of Islamic Economics), and FoSSEI (Friendship Study Islamic Economic Forum).