Indonesia has long aspired to have a large Sharia bank, a goal achieved on February 1, 2021, by merging three state-owned Islamic banks: Bank Syariah Mandiri, BRI Syariah, and BNI Syariah.
These three Islamic banks were outside the top ten of the national banking sector, necessitating the merger.
“There were approximately 100 commercial banks in the national banking sector. The Islamic banks were not in the top ten. Hence, the merger was needed,” said Dr. Hery Gunardi, the President Director of PT Bank Syariah Indonesia, during the “Sharia Financial Literacy: Young, Blessed & Free” lecture on Thursday (October 19) at UGM.
“They were considered marginalized, small-scale, and unable to carry out more significant activities that could have a massive impact on Indonesia’s finance and society.”
Dr. Gunardi mentioned that the desire for a large Sharia bank came from the President of the Republic of Indonesia, the Vice President, and the Minister of State-Owned Enterprises.
They believed that Indonesia, with a majority Muslim population and a halal industry with turnover reaching hundreds of trillion, could become a key player in Islamic banking.
“This, of course, is a foundation for advancing Sharia banking. It could be as successful as Sharia banks in Malaysia, Middle Eastern countries, and others,” he remarked.
Compared to Pakistan, Turkey, and other countries with large Muslim populations, Indonesia is recognized as having the largest Muslim population.
However, despite a population of nearly 265 million, with approximately 229 million being Muslims, the penetration of Sharia banking in Indonesia is still relatively low, at around 7 percent.
“From both positive and negative perspectives, this presents an opportunity to increase Sharia banking penetration in Indonesia, surpassing other countries,” he added.
“Today, Malaysia has about 30 percent, Brunei around 50 percent, and Middle Eastern countries over 50 percent, contrasting with our current situation.”
Dr. Gunardi acknowledged that in Indonesia, Sharia banking is not as robust as conventional banking due to the lower financial inclusion or financial literacy in Sharia compared to conventional banking.
Efforts to enhance this literacy in previous years were less effective, leading many Indonesians, especially those well-versed in banking, to prefer conventional banking.
“However, Sharia banking offers a more robust side. Why? Its business model is different from conventional banks,” Dr. Gunadi mentioned.
“Sharia banks do not involve interest but follow trading or profit-sharing processes, ultimately offering cheaper services than conventional banks.”
Additionally, Sharia Banks are safe institutions. In practice, Sharia banks do not finance non-halal businesses or speculative activities.
“God willing, safe in this world and the hereafter, Sharia banking is the safest and avoids speculation or non-halal practices,” he added.
Professor Ova Emilia, MD, the Rector of Universitas Gadjah Mada, welcomed the presence of Bank Syariah Indonesia at UGM to deliver a public lecture on managing finances wisely for students.
The UGM academic community highly anticipated this lecture due to the recent emergence of various financial management issues.
“We are aware of many recent unfortunate incidents. With the ease of digitalization, people easily borrow and indulge in online gambling, entangling many in our society, especially the younger generation, in unwanted circumstances,” stated the rector.
The Sharia Financial Literacy: Young, Blessed & Free talk show featured the Chief Economist of BSI, Banjaran Surya Indrastomo, and Islamic Financial Planner, Prita Ghozie.
During this event, a donation of IDR 250 million from Bank Syariah Indonesia was announced for the renovation of the Crisis Center building at UGM. Comedian Yudha Ramadhan also enlivened the event.
Author: Agung Nugroho