"Indonesia has a number of driving factors for the growth of Islamic finance. Supportive environment and favorable demography are the two main factors that foster the Islamic finance sector in the country," the Head of Islamic Finance at Thomson Reuters, Mustafa Adil, said here on Thursday.
The Financial Services Authority (OJK) has also come up with a new roadmap agenda which includes reducing fees on sharia-compliant products, education and training programs.
Mustafa added that a Muslim population of 210 millionwas a major demographic factor driving the growth of Islamic finance in Indonesia.
"Strengthening Islamic financial literacy encourages understanding and awareness of this sector," he said, adding that there is a strong correlation between the number of sharia scholars in a country and the extent to which Islamic finance regulations are comprehended by its people.
Although there are only 131 sharia scholars in Indonesia, less than Malaysias 205, the number of Islamic financial institutions has reached 150. Malaysia has only 100 Islamic financial institutions, Mustafa said.
According to him, Indonesias financial markets can be expanded through the growth of sovereign sukuk and underpenetrated Islamic funds market.
Alongside Malaysia and Bahrain, Indonesia is in the top three countries that regularly issue sovereign sukuk.
Sovereign sukuk is usually used to finance specific projects, such as dams, electricity plants, ports, airports, hospitals, and highways.(*)