ROLES OF THE GOVERNMENT TO IMPROVE THE PERFORMANCE OF ISLAMIC FINANCIAL INSTITUTIONS Rifki Ismal...
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Transcript of ROLES OF THE GOVERNMENT TO IMPROVE THE PERFORMANCE OF ISLAMIC FINANCIAL INSTITUTIONS Rifki Ismal...
ROLES OF THE GOVERNMENT TO ROLES OF THE GOVERNMENT TO IMPROVE THE PERFORMANCE OF IMPROVE THE PERFORMANCE OF ISLAMIC FINANCIAL INSTITUTIONSISLAMIC FINANCIAL INSTITUTIONS
Rifki Ismal
International Seminar of SETY 2013Gadjahmada University
Jogjakarta, 30 November 2013
1
Unique Values and Characteristics of Unique Values and Characteristics of the Indonesian Islamic Bankingthe Indonesian Islamic Banking
2
3
UNIQUE VALUES OF THE INDONESIAN IB
Sharia Based with Selected Sharia Compliance contracts.
Real sectors oriented (around 80% financing for SMEs).
Domestic Orientation (strong domestic demand, market share is still 3.8%)
Coopetion with Conventional Banks
An independent National Sharia Board and Fatwa Issuance
Comprehensive structure of Islamic bank and non bank Financial Institutions
Retail Banking instead of Investment Banking
A High Annual Growth of Islamic Banking Industry (+/- 40% per year).
An Average of 101% Financing to Deposit Ratio in the last 2 Decades
An Increasing Trend of Investment Based Financing
Social Driven Islamic Banking Development
More than 200 million are Moslem Population and Support Islamic Banks
Robust Domestic Economy (Less Affected by Global Financial Crisis)
Supportive Social and Political Situation
Driving Factors of the Indonesian Driving Factors of the Indonesian Islamic BankingIslamic Banking
4
• Central Bank Act No. 23 of 1999 (amended by Act No. 3 of 2004).
• Banking Act No 7 of 1992 (amended by Act No. 10 of 1998).
• Deposit Insurance Act No. 24 of 2004• Islamic Banking Act No. 21 of 2008.• Islamic Sovereign Bond (Sukuk) Act No. 19 of 2008.• Government Law No. 25 of 2009 (income tax for
sharia transactions). • Tax Neutrality in Government Law no. 42 of 2009.• Microfinance Act no. 20 of 2008• Waqf Act no. 23 of 2011• Financial Service Authority (OJK) Act no. 21 of 2011
5
LEGAL SUPPORTS
Medium and Large
Business
Small and Micro
Business
Conventional Banks
Islamic Banks
UUS
Existing BPRS
New BPRS
New BPR
Existing BPR
Existing Community
Existing Community
New Community
New Community
Investors of BPR/S
SMEs Financing is done by:
•Conventional Banks
•Islamic Banks
•Unit Usaha Syariah
•Rural Banks
•Islamic Rural Banks
•New Investors
•Baitul Maal Watamwill (BMT)
BMT
LINKAGES AMONG INSTITUTIONS
ExecutingExecuting
ICBICB
IRBIRB
MSMMSM
EsEsMSMEsMSMEs MSMEsMSMEs
Joint FinancingJoint Financing
ICBICB IRBIRB
ChannelinChannelingg
ICBICB
IRBIRB
Based on Mudharaba
Based on Wakala Based on
Musharaka
MODELS OF LINKAGES
ExecutingExecuting
ICB/ICB/BPRSBPRS
BMTBMT
MSMEsMSMEs MSMEsMSMEs MSMMSMEsEs
Joint FinancingJoint Financing
ICB/ICB/BPRSBPRS
BMTBMT
ChannelingChanneling
ICB/ICB/BPRSBPRS
BMTBMT
Based on Mudharaba
Based on Wakala Based on
Musharaka
MODELS OF LINKAGES
(Trilion Rp)
Types 2009 2010 2011 2012 Q3 2013MARKET SHARE
Islamic Banking 66,09 97,52 145,47 174,09 223,50** 4,80%
Takaful 4,8 6,979,15
13,1 14,97* 2,40%
Islamic Financing
0,64 2,36 3,62 22,66 27,54* 8,27%
Islamic Stocks n.a n.a 1.968,10 2.451,33 2.475,36 58,22%
Corporate Sukuk 7,02 7,82 7,92 9,79 11,41 3,26%
Islamuc Mutual Funds
4,63 5,23 5,56 8,05 9,35 4,94%
Government Sukuk
20,32 44,34 77,73 124,36 147,80 10,23%
* Per June 2013** Per August 2013
ASSETS OF ISLAMIC FINANCE
Source: Presentation of OJK in FREKS UIN Jakarta 2013Source: Presentation of OJK in FREKS UIN Jakarta 2013
Proportion of Islamic Stocks (October ,2013)
Stocks in DESStocks outside DES
Note : *) Per October 2013, Numbers of Stocks in DES are 309 stocks constisting of: • 302 stocks Period 1 was issued 24 May 2013• 7 stocks is from IPO
ISLAMIC STOCKS
Source: Presentation of OJK in FREKS UIN Jakarta 2013Source: Presentation of OJK in FREKS UIN Jakarta 2013
Development of Islamic Stocks
ISLAMIC MUTUAL FUNDS
Source: Presentation of OJK in FREKS UIN Jakarta 2013Source: Presentation of OJK in FREKS UIN Jakarta 2013
CORPORATE SUKUK
Source: Presentation of OJK in FREKS UIN Jakarta 2013Source: Presentation of OJK in FREKS UIN Jakarta 2013
Outstanding and Numbers of Corporate SukukOutstanding and Numbers of Corporate Sukuk
GOVERNMENT SUKUK
Source: Presentation of OJK in FREKS UIN Jakarta 2013Source: Presentation of OJK in FREKS UIN Jakarta 2013
Government Sukuk (Numbers and Outstanding)Government Sukuk (Numbers and Outstanding)
Future Development and Future Development and Supports from the RegulatorsSupports from the Regulators
14
15
Retail Konsumtif
Retail Produktif (SMEs)
Corporate
Government
Unbankable(micro)
Business Models
Investment Banking Development/
Infrastructure Banking
Special Purpose Banking for Hajj
Agriculture Banking
Infrastructure Banking
Corporate/Wholesale Banking
Investment Banking
Commercial Banking Retail Business
Banking
Consumer Banking Retail Banking
Micro Banking Branchless Banking Community Banking
(for women)
Potential Markets
• Business sectors are dominated by SME (99.9%):
(53,823,732 units)• Share of Banks’ financing to
SMEs is only 20.7% (Rp481.2 T)
• 50% population do not have financial access
• Government credits distributions were Rp20
T(2011)• Domestic labors, overseas workers and remote areas
people
•Hajj Funds Rp 25 T. •Infrastructure Funds +/- Rp75,15
trillion•MP3EI up to 2025 needs Rp1.923
trillion•Mining sectors 150 T
• IDB financing for private sector: US$1,1 billion up to 2014.
• High net worth individual (HNWI) are 112,000 persons
• Local Investors are 363.094 persons
Middle Class potentials with 9 million growth/year
Mass Affluent depositorsDemands for housing 2,6
million/year (REI)Estimation of car sales of more than
875,000 unit (GAIKINDO)
POTENTIAL MODELS OF ISLAMIC BANKS
OUTLOOK of ISLAMIC BANKING 2013 TPF
Financing
Assets
NPF 0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
3,500,000,000
4,000,000,000
4,500,000,000
5,000,000,000
Jan-11Feb-11M
ar-11A
pr-11M
ay-11Jun-11Jul-11A
ug-11S
ep-11O
ct-11N
ov-11D
ec-11Jan-12Feb-12M
ar-12A
pr-12M
ay-12Jun-12Jul-12A
ug-12S
ep-12O
ct-12N
ov-12D
ec-12Jan-13Feb-13M
ar-13A
pr-13M
ay-13Jun-13Jul-13A
ug-13S
ep-13O
ct-13N
ov-13D
ec-13
80,000,000
130,000,000
180,000,000
230,000,000
280,000,000
330,000,000
Asset CB (actual)Asset CB (moderate)Asset IB (actual)Asset IB (pesimist)Asset IB (moderate)Asset IB (optimist)
actual
estimation
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
Jan-1
1F
eb-1
1
Mar-1
1
Apr-1
1M
ay-1
1
Jun-1
1Jul-1
1
Aug-1
1
Sep-1
1O
ct-1
1
Nov-1
1
Dec-1
1Jan-1
2
Feb-1
2M
ar-1
2
Apr-1
2
May-1
2Jun-1
2
Jul-1
2A
ug-1
2
Sep-1
2
Oct-1
2N
ov-1
2
Dec-1
2Jan-1
3
Feb-1
3
Mar-1
3A
pr-1
3
May-1
3
Jun-1
3Jul-1
3
Aug-1
3S
ep-1
3
Oct-1
3
Nov-1
3D
ec-1
3
DPK IB (actual)DPK IB (pesimist)DPK IB (moderate)DPK IB (optimist)
actual
estimation actual
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
160,000,000
180,000,000
200,000,000
220,000,000
Jan-1
1
Feb-1
1
Mar-1
1
Apr-1
1
May-1
1
Jun-1
1
Jul-1
1
Aug-1
1
Sep-1
1
Oct-1
1
Nov-1
1
Dec-1
1
Jan-1
2
Feb-1
2
Mar-1
2
Apr-1
2
May-1
2
Jun-1
2
Jul-1
2
Aug-1
2
Sep-1
2
Oct-1
2
Nov-1
2
Dec-1
2
Jan-1
3
Feb-1
3
Mar-1
3
Apr-1
3
May-1
3
Jun-1
3
Jul-1
3
Aug-1
3
Sep-1
3
Oct-1
3
Nov-1
3
Dec-1
3
Financing IB (actual)Financing IB (pesimist)Financing IB (moderate)Financing IB (optimist)
actual
estimation actual
Total Aset Total DPK Total PembiayaanPesimis 213.75 174.43 180.30Moderat 237.50 183.61 189.79Optimis 261.25 193.67 199.28
SkenarioAkhir 2013
MARKET SHARE OF ISLAMIC BANKING
4.87
5.85
5.07
3.2
3.7
4.2
4.7
5.2
5.7
6.2
Jan
-11
Ma
r-11
Ma
y-11
Jul-1
1
Se
p-1
1
No
v-11
Jan
-12
Ma
r-12
Ma
y-12
Jul-1
2
Se
p-1
2
No
v-12
Jan
-13
Ma
r-13
Ma
y-13
Jul-1
3
Se
p-1
3
No
v-13
market share (actual)
market share (estimation)
OUTLOOK of ISLAMIC BANKING 2014 TPF
Financing
Assets
NPF
Total Aset Total DPK Total PembiayaanPesimis 255.21 209.66 216.72Moderat 283.57 220.69 228.13Optimis 311.92 232.82 239.54
SkenarioAkhir 2014
170,000,000
190,000,000
210,000,000
230,000,000
250,000,000
270,000,000
290,000,000
310,000,000
330,000,000
Jan-1
3
Feb-1
3
Mar-1
3
Apr-1
3
May-1
3
Jun-1
3
Jul-1
3
Aug-1
3
Sep-1
3
Oct-1
3
Nov-1
3
Dec-1
3
Jan-1
4
Feb-1
4
Mar-1
4
Apr-1
4
May-1
4
Jun-1
4
Jul-1
4
Aug-1
4
Sep-1
4
Oct-1
4
Nov-1
4
Dec-1
4
Estimasi Aset (Moderat)
Estimasi Aset (pesimis)
Estimasi Aset (optimis)
135,000,000
145,000,000
155,000,000
165,000,000
175,000,000
185,000,000
195,000,000
205,000,000
215,000,000
225,000,000
235,000,000
Jan-1
3
Feb-1
3
Mar-1
3
Apr-1
3
May-1
3
Jun-1
3
Jul-1
3
Aug-1
3
Sep-1
3
Oct-1
3
Nov-1
3
Dec-1
3
Jan-1
4
Feb-1
4
Mar-1
4
Apr-1
4
May-1
4
Jun-1
4
Jul-1
4
Aug-1
4
Sep-1
4
Oct-1
4
Nov-1
4
Dec-1
4
Estimasi DPK (moderat)
Estimasi DPK (pesimis)
Estimasi DPK (optimis)
140,000,000
150,000,000
160,000,000
170,000,000
180,000,000
190,000,000
200,000,000
210,000,000
220,000,000
230,000,000
240,000,000
Jan-1
3
Feb-1
3
Mar-1
3
Apr-1
3
May-1
3
Jun-1
3
Jul-1
3
Aug-1
3
Sep-1
3
Oct-1
3
Nov-1
3
Dec-1
3
Jan-1
4
Feb-1
4
Mar-1
4
Apr-1
4
May-1
4
Jun-1
4
Jul-1
4
Aug-1
4
Sep-1
4
Oct-1
4
Nov-1
4
Dec-1
4
Estimasi Pembiayaan (pesimis)
Estimasi Pembiayaan (optimis)
Estimasi Pembiayaan (moderat)
PROMISING FACTORS
A New State Owned Islamic Bank
100% Hajj Funds in Islamic Banks
Establishment of Waqf Banks
Conversion of UUS to become BUS until 2023
Robust policy coordination under OJK
Project based Sukuk to be issued by the government
Continuous supports from the parent banks to their IB subsidiaries
Market expansion in MEA (2015-2020)
Directorate of Islamic Finance in Ministry of Finance
Islamic Finance Division in Deposit Guarantee Institution (LPS)
Macroprudential and Economic stabilityMacroprudential and Economic stability
Robust Coordination of Monetary Policy, Fiscal Policy and Financial Sector PolicyRobust Coordination of Monetary Policy, Fiscal Policy and Financial Sector Policy
Micro and Macro Development of Islamic financeMicro and Macro Development of Islamic finance
SUPPORTS FROM THE CENTRAL BANK
Source: Presentation of OJK in FREKS UIN Jakarta 2013Source: Presentation of OJK in FREKS UIN Jakarta 2013
SUPPORTS FROM OJK
Source: Presentation of OJK in FREKS UIN Jakarta 2013Source: Presentation of OJK in FREKS UIN Jakarta 2013
Developing regulations to create conducive condition
Level of Playing Field
Developing Products with Islamic Principles
Developing Islamic HR
Well-planned socialization and education programs
Contribution on Acceleration of the Indonesian Economic DevelopmentContribution on Acceleration of the Indonesian Economic Development
Capturing the potential of middle class and upper class peopleCapturing the potential of middle class and upper class people
Opening an access for developing middle class people in all segmentsOpening an access for developing middle class people in all segments
FUTURE ROLES OF ISLAMIC FINANCE
Source: Presentation of OJK in FREKS UIN Jakarta 2013Source: Presentation of OJK in FREKS UIN Jakarta 2013
Rifki Ismal is both central banker and lecturer. He earned bachelor degree in economics from University of Indonesia, master degree in economics from University of Michigan, Ann Arbor (USA), PhD in Islamic economics and Finance from Durham University (England) and an Associate Professor in Islamic Banking and Finance is from the Australian Government (Australian Center for Islamic Financial Studies). Besides lecturing in some Universities, he has published more thirty papers in international journals and a book titling Islamic Banking in Indonesia: New Perspective in Monetary and Finance (John Wiley and Sons, March 2013)
SHORT BIO
THANK YOU THANK YOU
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