OJK Predicts Shariah Assets To Grow 35 To 40 Pct

Jakarta, Nov 25 (Antara) - Indonesia`s Financial Service Authority (OJK) has predicted that the shariah finance industry will grow 35-40 percent in 2014, higher than the annual growth rate of 15-20 percent estimated for the conventional finance industry. "Next year, the growth in shariah finance could be 35 to 40 percent. Demand is very high and the prospects in Indonesia are good," OJK`s chief executive for non-bank financial industry (IKNB) supervision, Firdaus Djaelani, said at a seminar here on Monday. He said in the past five years, the total assets of shariah financial institutions grew 6.5 times. In 2007, the total assets of financial institutions were reported at Rp38 trillion; shariah bank assets contributed Rp36 trillion, while non-bank financial institutions (IKNB) accounted for Rp1.9 trillion. In 2012, the total assets of shariah financial institutions reached Rp240 trillion, with shariah bank assets contributing Rp199.7 trillion and IKNBs, Rp47.5 trillion. "Growth is good. Shariah financial institutions could grow 35 percent, higher than the rate at which conventional financial institutions are expected to expand. All segments under shariah banking could grow faster than those under conventional banking and might even surpass growth rates of the insurance and pawnshop sectors," he noted. Firdaus said public knowledge and trust in the shariah system has grown strongly, helping the shariah financial industry develop rapidly in the country. He added that OJK plans to offer incentives to shariah finance players that participate in developing shariah financial institutions in the country. "The incentives include lower capital requirements for establishing shariah financial institutions," he revealed. On the subject of regulating the shariah finance industry, Firdaus said the OJK would prepare separate regulations because shariah and conventional finance institutions are different from each other. "We have regulations, but we need to examine whether they need to be overhauled to boost IKNB growth. We used to regulate banking and insurance, but now, more shariah businesses have emerged, such as shariah financing, shariah pawnshops and shariah capital ventures. Since they are operating in the market, we certainly have to strengthen regulations in these areas," he added.