Ranking in Islamic Economy Rises, Indonesia Needs Consistency
Indonesia’s sharia economy and finance have developed rapidly in recent years.
By
KARINA ISNA IRAWAN
·3 minutes read
JAKARTA, KOMPAS – Indonesia’s sharia economy and finance have developed rapidly in recent years. However, consistency in the implementation of a long-term policy is needed to enable Indonesia to catch up other countries in the sector.
In the 2020/2021 State of the Global Islamic Economy Report (SGIER) released by DinarStandard, a research company based in Dubai and New York, Indonesia was ranked fourth of 57 countries, rising from the fifth position in 2019 and 10th position in 2018. Indonesia’s position is below Malaysia, Saudi Arabia and the United Arab Emirates.
Consistency in the implementation of a long-term policy is needed to enable Indonesia to catch up other countries in the sector
The ranking of Islamic economic indicators is based on the performance of seven sectors, namely the halal food and beverage industry, Islamic economy, Muslim-friendly tourism, Muslim fashion, the halal pharmaceutical industry, halal cosmetics, and Islamic media and recreation. Research results have taken into account the impact of COVID-19.In his remark at the launch of the 2020/2021 SGIER in Jakarta on Tuesday (17/11/2020), Indonesia’s Vice President Ma\'ruf Amin said the Islamic economy and finance in Indonesia had developed rapidly in the last several years. He said that the rapid development could not be separated from the government’s efforts to provide various incentives to support industry and investment in halal infrastructure, products and services.
There were at least three main drivers of Indonesia\'s sharia economy and finance in 2019, namely the Islamic financial assets worth $99 billion, the arrival of around 2.5 million Muslim tourists, and the Muslim lifestyle expenditures, which reached $203 billion.
According to the Vice President, the development of Indonesia’s Islamic economy and finance is focused on four sectors, namely the halal product industry, sharia finance, optimization of Islamic social funds, and increasing the capacity of sharia businesses, including micro, small and medium enterprises.
Kompas/Priyombodo
Visitors see the products offered by Islamic boarding schools in the 2019 Indonesia Sharia Economic Festival (ISEF) activities at the Jakarta Convention Center, Central Jakarta, Wednesday (11/13/2019).
Rafi-Uddin Shikoh, the CEO and managing director of Dinarstandard, said that the 2020/2021 SGIER had taken into account the impact of COVID-19. Several sectors have been under pressure during the pandemic. However, the economy is expected to begin to recover by the end of 2021.
Global Muslim lifestyle expenditures are expected to fall by 8 percent due to the pandemic. In 2019, global Muslim spending on food, pharmaceuticals, cosmetics, fashion, travel and recreation reached $2.02 billion, a 3.2 percent increase compared to the figure recorded in 2018.
According to IPB University economist Irfan Syauqi Beik, the halal food and beverage and pharmaceutical industries are the key drivers of the growth of Indonesia\'s Islamic economy amid the pandemic, as reflected in the growth of the agricultural sector, which includes halal food.
One of Indonesia\'s targets is to become the center of the world\'s halal products by 2024.
The chairman of the Indonesian Halal Lifestyle Center, Sapta Nirwandar, hoped that the rapid development of the country’s Islamic economy and sharia could attract investors to produce halal products. One of Indonesia\'s targets is to become the center of the world\'s halal products by 2024.
Bank Indonesia’s deputy governor, Sugeng, said that Indonesia\'s Islamic economy, which was previously limited only to the financial sector, had expanded to a wider scope, including the halal value chain, Islamic media and recreation, tourism, halal pharmacy and cosmetics, and social finance.
However, the large demand for various sectors of the Islamic economy and finance should be supported by production activities in order to be able creates new sources of growth for the Indonesian economy.
